1
Exhibit 2.1
EXECUTION COPY
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RECAPITALIZATION AGREEMENT
by and among
CSX CORPORATION,
a Virginia corporation,
VECTURA GROUP, INC.,
a Delaware corporation,
AMERICAN COMMERCIAL LINES HOLDINGS LLC,
a Delaware limited liability company,
AMERICAN COMMERCIAL LINES LLC,
a Delaware limited liability company, and
NATIONAL MARINE, INC., a Delaware corporation.
Dated as of
April 17, 1998.
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TABLE OF CONTENTS
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ARTICLE I
Certain Definitions
Section 1.1. "AAA" ......................................................................... 2
Section 1.2. "Accounting Firm" ............................................................. 2
Section 1.3. "Accounting Principles" ....................................................... 2
Section 1.4. "ACL" ......................................................................... 3
Section 1.5. "ACL Amount"................................................................... 3
Section 1.6. "ACL Assumed Funded Debt" ..................................................... 3
Section 1.7. [intentionally omitted] ....................................................... 3
Section 1.8. "ACL Balance Sheet" ........................................................... 3
Section 1.9. "ACL Current Employees" ....................................................... 3
Section 1.10. "ACL Employee Benefit Plans" .................................................. 3
Section 1.11. "ACL Employees" ............................................................... 3
Section 1.12. "ACL Excluded Assets" ......................................................... 3
Section 1.13. "ACL Excluded Liabilities" .................................................... 3
Section 1.14. "ACL Financial Statements" .................................................... 3
Section 1.15. "ACL Fixed Assets" ............................................................ 3
Section 1.16. "ACL Foreign Plans" ........................................................... 3
Section 1.17. "ACL Former Employees" ........................................................ 4
Section 1.18. "ACL Holdings" ................................................................ 4
Section 1.19. "ACL Holdings Indemnified Party" .............................................. 4
Section 1.20. "ACL Holdings Savings Plan" ................................................... 4
Section 1.21. "ACL Income Statement" ........................................................ 4
Section 1.22. "ACL Indebtedness" ............................................................ 4
Section 1.23. "ACL Intellectual Property Rights" ............................................ 4
Section 1.24. "ACL Leased Real Property" .................................................... 4
Section 1.25. "ACL Leases" .................................................................. 4
Section 1.26. "ACL Licenses" ................................................................ 4
Section 1.27. "ACL Litigation" .............................................................. 4
Section 1.28. "ACL Multiemployer Plan"....................................................... 4
Section 1.29. "ACL-Only Employee Benefit Plans".............................................. 4
Section 1.30. "ACL Owned Real Property" ..................................................... 4
Section 1.31. "ACL Permitted Encumbrances" .................................................. 4
Section 1.32. "ACL Pro Forma Balance Sheet" ................................................. 5
Section 1.33. "ACL Pro Forma Transactions" .................................................. 5
Section 1.34. "ACL Savings Plan Employee" ................................................... 5
Section 1.35. "ACL Target WC Level" ......................................................... 5
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Section 1.36. "ACL Transfer Date" ........................................................... 5
Section 1.37. "Acquisition Proposal" ........................................................ 5
Section 1.38. "Action" ...................................................................... 5
Section 1.39. "Adverse Consequences" ........................................................ 5
Section 1.40. "Affiliate".................................................................... 6
Section 1.41. "Agreement" ................................................................... 6
Section 1.42. "Antitrust Laws" .............................................................. 6
Section 1.43. "Assumed Vectura Employee Benefit Plans" ...................................... 6
Section 1.44. "Barging Liabilities" ......................................................... 6
Section 1.45. "Business"..................................................................... 6
Section 1.46. "Claimant" .................................................................... 7
Section 1.47. "Closing" ..................................................................... 7
Section 1.48. "Closing Date" ................................................................ 7
Section 1.49. "Code" ........................................................................ 7
Section 1.50. "Confidentiality Agreement" ................................................... 7
Section 1.51. "Continuation Period" ......................................................... 7
Section 1.51a. "Controlling Party" ........................................................... 7
Section 1.52. "CSX" ......................................................................... 7
Section 1.53. "CSX Savings Plan" ............................................................ 7
Section 1.54. "CTC" ......................................................................... 7
Section 1.55. "Current Portion of Long-Term Debt" ........................................... 7
Section 1.56. "CVC" ......................................................................... 7
Section 1.57. "Encumbrances" ................................................................ 7
Section 1.58. "Environmental Law" ........................................................... 7
Section 1.59. "Equity Contribution" ......................................................... 8
Section 1.60. "Equity Letters"............................................................... 8
Section 1.61. "ERISA" ....................................................................... 8
Section 1.62. "Estimated ACL Amount" ........................................................ 8
Section 1.63. "Estimated NMI Holdings Amount" ............................................... 8
Section 1.64. "Final Statement" ............................................................. 8
Section 1.65. "Financing Letters" ........................................................... 8
Section 1.66. "Funded Debt" ................................................................. 8
Section 1.67. "GAAP" ........................................................................ 8
Section 1.68. "Government Authority" ........................................................ 9
Section 1.69. "Hazardous Material" .......................................................... 9
Section 1.70. "hereof," "herein," and "herewith" ............................................ 9
Section 1.71. "High Yield Letters" .......................................................... 9
Section 1.72. "HSR Act" ..................................................................... 9
Section 1.73. "including" ................................................................... 9
Section 1.74. "Income Taxes"................................................................. 9
Section 1.75. "Indemnified Party" ........................................................... 9
Section 1.76. "Indemnifying Party" .......................................................... 9
Section 1.77. "Initial Funding Amount" ...................................................... 9
Section 1.78. "Initial Statement" ........................................................... 9
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Section 1.79. "Intellectual Property Rights"................................................. 9
Section 1.80. "IRS" ......................................................................... 9
Section 1.81. "Marked Materials" ............................................................ 10
Section 1.82. "material," "materially," "material adverse change" and "material
adverse effect"................................................................ 10
Section 1.83. "Multiemployer Plan" .......................................................... 10
Section 1.84. "NBL" ......................................................................... 10
Section 1.85. "NMI".......................................................................... 10
Section 1.86. "NMI Holdings"................................................................. 10
Section 1.87. "NMI Holdings Amount".......................................................... 10
Section 1.88. "NMI Holdings Target WC Level" ................................................ 10
Section 1.89. "NMI Pro Forma Balance Sheets" ................................................ 10
Section 1.90. "NMI Pro Forma Financial Statements"........................................... 10
Section 1.91. "Noncompete Period"............................................................ 10
Section 1.91a. "Noncontrolling Party"......................................................... 10
Section 1.92. "Non-Qualified Plans" ......................................................... 11
Section 1.93. "Notice of Disagreement" ...................................................... 11
Section 1.94. "or"........................................................................... 11
Section 1.95. "ordinary course consistent with past practice"................................ 11
Section 1.96. "Parties" ..................................................................... 11
Section 1.97. "Party Indemnified Party" ..................................................... 11
Section 1.98. "person" ...................................................................... 11
Section 1.99. "Recapitalization Transactions"................................................ 11
Section 1.100. "Request" ..................................................................... 11
Section 1.101. "Release"...................................................................... 11
Section 1.102. "Respondent" .................................................................. 11
Section 1.103. "Returns"...................................................................... 11
Section 1.104. "Rules" ....................................................................... 11
Section 1.105. "Senior Credit Letter" ........................................................ 11
Section 1.106. "Senior Common Amount"......................................................... 11
Section 1.107. "Setoff"....................................................................... 11]
Section 1.108. "Subsidiary" .................................................................. 12
Section 1.109. "Taxes"........................................................................ 12
Section 1.110. "Taxing Authority"............................................................. 12
Section 1.111. "to the knowledge of ACL"...................................................... 12
Section 1.112. "to the knowledge of any Vectura Party"........................................ 12
Section 1.113. "Total Current Assets"......................................................... 12
Section 1.114. "Total Current Liabilities".................................................... 12
Section 1.115. "Transferred ACL Subsidiaries" ................................................ 12
Section 1.116. "Transferred Foreign ACL Subsidiaries" ........................................ 12
Section 1.117. "Transferred NMI Holdings Subsidiaries" ....................................... 12
Section 1.118. [intentionally omitted]........................................................ 12
Section 1.119. "Vectura" ..................................................................... 12
Section 1.120. "Vectura Balance Sheet" ....................................................... 12
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Section 1.121. "Vectura Continuing Employees" ................................................ 13
Section 1.122. "Vectura Current Employees" ................................................... 13
Section 1.123. "Vectura Employee Benefit Plans" .............................................. 13
Section 1.124. "Vectura Employees" ........................................................... 13
Section 1.125 "Vectura Excluded Assets"...................................................... 13
Section 1.126 "Vectura Excluded Liabilities"................................................. 13
Section 1.127. "Vectura Excluded Subsidiaries" ............................................... 13
Section 1.128. "Vectura Financial Statements" ................................................ 13
Section 1.129. "Vectura Fixed Assets" ........................................................ 13
Section 1.130. "Vectura Foreign Plans"........................................................ 13
Section 1.131. "Vectura Former Employees" .................................................... 13
Section 1.132. "Vectura Income Statement" .................................................... 13
Section 1.133. "Vectura Indebtedness" ........................................................ 14
Section 1.134. "Vectura Intellectual Property Rights" ........................................ 14
Section 1.135. "Vectura Leased Real Property" ................................................ 14
Section 1.136. "Vectura Leases" .............................................................. 14
Section 1.137. "Vectura Licenses" ............................................................ 14
Section 1.138. "Vectura Litigation" .......................................................... 14
Section 1.139. "Vectura Matter" .............................................................. 14
Section 1.140. "Vectura Multiemployer Plan"................................................... 14
Section 1.141. "Vectura-Only Employee Benefit Plans".......................................... 14
Section 1.142. "Vectura Owned Real Property" ................................................. 14
Section 1.143 "Vectura Assumed Funded Debt".................................................. 14
Section 1.144 "Vectura Parties".............................................................. 14
Section 1.145 "Vectura Permitted Encumbrances" .............................................. 14
Section 1.146 "Vectura Savings Plan"......................................................... 14
Section 1.147. "WARN Act" .................................................................... 15
Section 1.148. "Working Capital" ............................................................. 15
ARTICLE II
Consummation of Recapitalization Transactions; Closing
Section 2.1. Recapitalization Transactions ................................................. 15
Section 2.2. Closing Documents ............................................................. 17
Section 2.3. Time and Place of Closing ..................................................... 18
Section 2.4. Adjustment .................................................................... 18
ARTICLE III
Representations and Warranties of CSX
Section 3.1. Incorporation; Authorization; Etc. ............................................ 20
Section 3.2. Capitalization ................................................................ 21
Section 3.3. Financial Statements .......................................................... 22
Section 3.4. Undisclosed Liabilities ....................................................... 23
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Section 3.5. Properties .................................................................... 23
Section 3.6. Absence of Certain Changes .................................................... 24
Section 3.7. Litigation; Orders ............................................................ 24
Section 3.8. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc................................................................. 24
Section 3.9. Labor Matters ................................................................. 25
Section 3.10. Compliance with Laws .......................................................... 26
Section 3.11. Insurance ..................................................................... 26
Section 3.12. Material Contracts ............................................................ 26
Section 3.13. Fixed Assets .................................................................. 27
Section 3.14. Environmental Matters ......................................................... 27
Section 3.15. Affiliate Transactions ........................................................ 29
Section 3.16. Intellectual Property ......................................................... 29
Section 3.17. Employee Benefit Plans ........................................................ 30
Section 3.18. Brokers, Finders, Etc. ........................................................ 32
Section 3.19. Acquisition for Investment..................................................... 32
Section 3.20. Qualifications of ACL.......................................................... 32
Section 3.21 No Outside Reliance............................................................ 33
ARTICLE IV
Representations and Warranties of the Vectura Parties
Section 4.1. Incorporation; Authorization; Etc.............................................. 33
Section 4.2. Capitalization................................................................. 34
Section 4.3. Financial Statements........................................................... 35
Section 4.4. Undisclosed Liabilities........................................................ 36
Section 4.5. Properties..................................................................... 36
Section 4.6. Absence of Certain Changes..................................................... 37
Section 4.7. Litigation; Orders............................................................. 37
Section 4.8. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc................................................................. 38
Section 4.9. Labor Matters.................................................................. 38
Section 4.10. Compliance with Laws........................................................... 39
Section 4.11. Insurance...................................................................... 39
Section 4.12. Material Contracts............................................................. 40
Section 4.13. Fixed Assets................................................................... 41
Section 4.14. Environmental Matters.......................................................... 41
Section 4.15. Affiliate Transactions......................................................... 42
Section 4.16. Intellectual Property.......................................................... 42
Section 4.17. Employee Benefit Plans......................................................... 43
Section 4.18. Brokers, Finders, Etc.......................................................... 45
Section 4.19. Qualifications of Vectura Parties.............................................. 46
Section 4.20. Availability of Funds.......................................................... 46
Section 4.21. No Outside Reliance ........................................................... 46
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Section 4.22. Acquisition for Investment .................................................... 47
ARTICLE V
Covenants of the Parties
Section 5.1. Investigation of Business; Access to Properties and
Records, Etc. ............................................................... 47
Section 5.2. Efforts; Obtaining Consents; Antitrust Laws ................................... 49
Section 5.3. Further Assurances ............................................................ 50
Section 5.4. Conduct of Business ........................................................... 50
Section 5.5. Pro Forma Transactions ........................................................ 55
Section 5.6. Interim Financial Statements .................................................. 55
Section 5.7. Public Announcements; Non-Public Information .................................. 55
Section 5.8. Intercompany Items ............................................................ 56
Section 5.9. Competition ................................................................... 56
Section 5.10. Termination of Discussions .................................................... 58
Section 5.11. No Solicitation ............................................................... 58
Section 5.12. Use of Business Names.......................................................... 58
ARTICLE VI
Employee Benefits
Section 6.1. Termination of Participation .................................................. 58
Section 6.2. ACL Holdings' Obligations ..................................................... 59
Section 6.3. Savings Plan................................................................... 61
Section 6.4. Plan Transfers ................................................................ 62
Section 6.5. WARN Act ...................................................................... 62
ARTICLE VII
Tax Matters
Section 7.1. Tax Returns ................................................................... 62
Section 7.2. Definitions ................................................................... 64
Section 7.3. Tax Indemnification by CSX .................................................... 65
Section 7.4. Tax Indemnification by the Vectura Parties .................................... 65
Section 7.5. Tax Indemnification by ACL Holdings ........................................... 65
Section 7.6. Allocation of Certain Taxes.................................................... 66
Section 7.7. Survival ...................................................................... 66
Section 7.8. Cooperation and Exchange of Information ....................................... 66
Section 7.9. Payment of Indemnified Taxes .................................................. 69
Section 7.10. Filing Responsibility ......................................................... 69
Section 7.11. Refunds ....................................................................... 70
Section 7.12. Limitation on Tax Indemnification ............................................. 71
Section 7.13. Article VII to Control ........................................................ 71
Section 7.14. Tax Treatment.................................................................. 71
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ARTICLE VIII
Conditions of the Vectura Parties' Obligations to Close
Section 8.1. Representations, Warranties and Covenants of CSX .............................. 72
Section 8.2. Filings; Consents; Waiting Periods ............................................ 72
Section 8.3. No Injunction ................................................................. 72
Section 8.4. Financing ..................................................................... 72
Section 8.5. Indebtedness .................................................................. 72
Section 8.6. Documents ..................................................................... 72
Section 8.7. Material Adverse Change ....................................................... 73
Section 8.8. Transition Services Agreement.................................................. 73
ARTICLE IX
Conditions to CSX's Obligation to Close
Section 9.1. Representations, Warranties and Covenants of the
Vectura Parties ............................................................. 73
Section 9.2. Filings; Consents; Waiting Periods ............................................ 73
Section 9.3. No Injunction ................................................................. 73
Section 9.4. Indebtedness .................................................................. 73
Section 9.5. Documents ..................................................................... 73
Section 9.6. Solvency Opinion............................................................... 74
Section 9.7. Material Adverse Change ....................................................... 74
ARTICLE X
Survival; Indemnification
Section 10.1. Survival ...................................................................... 74
Section 10.2. Indemnification ............................................................... 74
Section 10.3. Certain Limitations ........................................................... 75
Section 10.4. Payment of Indemnification .................................................... 76
Section 10.5. ACL Holdings Indemnification .................................................. 76
Section 10.6. Vectura Indemnification ....................................................... 76
Section 10.7. Procedures for Third-Party Claims ............................................. 77
Section 10.8. Procedures for Non-Third Party Claims ......................................... 78
Section 10.9. Arbitration ................................................................... 78
Section 10.10. Remedies Exclusive ............................................................ 79
ARTICLE XI
Termination
Section 11.1. Termination.................................................................... 79
Section 11.2. Procedure and Effect of Termination............................................ 80
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ARTICLE XII
Miscellaneous
Section 12.1. Counterparts................................................................... 80
Section 12.2. Governing Law; Jurisdiction and Forum.......................................... 80
Section 12.3. Entire Agreement; Third-Party Beneficiary...................................... 82
Section 12.4. Expenses....................................................................... 82
Section 12.5. Notices........................................................................ 83
Section 12.6. Successors and Assigns......................................................... 84
Section 12.7. Headings; Definitions.......................................................... 84
Section 12.8. Amendments and Waivers......................................................... 84
Section 12.9. Interpretation; Absence of Presumption......................................... 85
Section 12.10. Severability................................................................... 86
Section 12.11. Timing......................................................................... 86
Section 12.12. NMI Holdings................................................................... 86
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SCHEDULES
Schedule 1.12 ACL Excluded Assets
Schedule 1.13 ACL Excluded Liabilities
Schedule 1.66 Vectura Funded Debt
Schedule 1.125 Vectura Excluded Assets
Schedule 1.126 Vectura Excluded Liabilities
Schedule 1.143 Vectura Assumed Funded Debt
Schedule 2.1(d) ACL Assumed Funded Debt
Schedule 3.1 ACL Conflicts; Subsidiaries
Schedule 3.2 ACL Capitalization
Schedule 3.3 ACL Financial Statements
Schedule 3.4 ACL Undisclosed Liabilities
Schedule 3.5 ACL Properties
Schedule 3.6 ACL Absence of Certain Changes
Schedule 3.7 ACL Litigation; Orders
Schedule 3.8 ACL Licenses and Consents
Schedule 3.9 ACL Labor Matters
Schedule 3.10 ACL Compliance with Laws
Schedule 3.11 ACL Insurance
Schedule 3.12(a) ACL Contracts
Schedule 3.12(b) ACL Employment Agreements
Schedule 3.14 ACL Environmental Matters
Schedule 3.15 ACL Affiliate Transactions
Schedule 3.16 ACL Intellectual Property
Schedule 3.16(a) ACL Employee Benefit Plans
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Schedule 3.16(c) ACL Pension Plans
Schedule 3.16(d) ACL Plan Triggers
Schedule 3.1 ACL Conflicts; Subsidiaries
Schedule 3.2 ACL Capitalization
Schedule 3.3 ACL Financial Statements
Schedule 3.4 ACL Undisclosed Liabilities
Schedule 3.5 ACL Properties
Schedule 3.6 ACL Absence of Certain Changes
Schedule 3.7 ACL Litigation; Orders
Schedule 3.8 ACL Licenses and Consents
Schedule 3.9 ACL Labor Matters
Schedule 3.10 ACL Compliance with Laws
Schedule 3.11 ACL Insurance
Schedule 3.12(a) ACL Contracts
Schedule 3.12(b) ACL Employment Agreements
Schedule 3.14 ACL Environmental Matters
Schedule 3.15 ACL Affiliate Transactions
Schedule 3.16 ACL Intellectual Property
Schedule 3.17(a) ACL Employee Benefit Plans
Schedule 3.17(c) ACL Pension Plans
Schedule 3.17(d) ACL Plan Triggers
Schedule 4.1 Vectura Conflicts; Subsidiaries
Schedule 4.2 Vectura Capitalization
Schedule 4.3 Vectura Financial Statements
Schedule 4.4 Vectura Undisclosed Liabilities
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Schedule 4.5 Vectura Properties
Schedule 4.6 Vectura Absence of Certain Changes
Schedule 4.7 Vectura Litigation; Orders
Schedule 4.8 Vectura Licenses and Consents
Schedule 4.9 Vectura Labor Matters
Schedule 4.10 Vectura Compliance with Laws
Schedule 4.11 Vectura Insurance
Schedule 4.12(a) Vectura Contracts
Schedule 4.12(b) Vectura Employment Agreements
Schedule 4.14 Vectura Environmental Matters
Schedule 4.15 Vectura Affiliate Transactions
Schedule 4.16 Vectura Intellectual Property
Schedule 4.17(a) Vectura Employee Benefit Plans
Schedule 4.17(b) Vectura Plan Compliance
Schedule 4.17(c) Vectura Pension Plans
Schedule 4.17(d) Vectura Plan Triggers
Schedule 5.4(a) ACL Conduct of Business
Schedule 5.4(b) Vectura Conduct of Business
Schedule 7.1(a) ACL Taxes
Schedule 7.1(b) Vectura Taxes
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EXHIBITS
Exhibit A Certain Terms of ACL Holdings LLC Agreement
Exhibit B Substance of CSX Legal Opinion
Exhibit C Substance of Vectura Legal Opinion
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This RECAPITALIZATION AGREEMENT (together with the Schedules
and Exhibits hereto, this "Agreement"), is dated as of April 17, 1998, is by and
among CSX Corporation, a Virginia corporation ("CSX"), Vectura Group, Inc., a
Delaware corporation ("Vectura"), National Marine, Inc., a Delaware corporation
and a wholly owned Subsidiary of Vectura ("NMI" and, together with Vectura, the
"Vectura Parties"), American Commercial Lines Holdings LLC, a Delaware limited
liability company and a wholly owned Subsidiary of CSX ("ACL Holdings"), and
American Commercial Lines LLC, a Delaware limited liability company and a wholly
owned Subsidiary of ACL Holdings ("ACL", and, together with CSX, the Vectura
Parties and ACL Holdings, the "Parties").
WHEREAS, ACL and the barging business of the Vectura Parties
are engaged in the business of owning, chartering and/or operating barges and
related vessels and other related businesses;
WHEREAS, ACL is the successor to American Commercial Lines,
Inc., a Delaware corporation, all of the businesses of which (including each of
its Subsidiaries, but excluding, as of the Closing, the ACL Excluded Assets and
the ACL Excluded Liabilities) have been contributed (by merger) to ACL;
WHEREAS, upon the terms and subject to the conditions set
forth herein, the Vectura Parties shall organize a new Delaware limited
liability company ("NMI Holdings") as a wholly owned Subsidiary of NMI and shall
cause to be transferred to NMI Holdings, and to one or more other Delaware
limited liability companies wholly owned by NMI Holdings, all assets and
liabilities of NMI and all assets and Barging Liabilities of Vectura and its
Subsidiaries other than any Vectura Excluded Assets and Vectura Excluded
Liabilities;
WHEREAS, the Parties desire to combine the businesses of ACL
and NMI Holdings, to consummate the financing transactions contemplated hereby
and to recapitalize ACL Holdings, upon the terms and subject to the conditions
set forth herein;
WHEREAS, in connection with such combination, the Parties
intend that each corporate Subsidiary of ACL (other than any Transferred Foreign
ACL Subsidiary) and each corporate Subsidiary of NMI (other than any Vectura
Excluded Subsidiary) shall be merged with and into a separate limited liability
company organized under the laws of the State of Delaware, upon the terms and
subject to the conditions set forth herein;
WHEREAS, each of the Parties has received all requisite
approvals of its Board of Directors and stockholders (or comparable
organizational bodies) to enter into this Agreement and to consummate the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other
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good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Parties hereby agree
as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
Section 1.1. "AAA" shall have the meaning set forth in Section 10.9.
Section 1.2. "Accounting Firm" shall mean Deloitte & Touche LLP, or,
if such firm is unable or unwilling to undertake the responsibilities required
of the Accounting Firm hereunder, such other nationally recognized independent
public accounting firm as shall be agreed upon by the Parties in writing,
provided that in any case the senior persons performing services as the
Accounting Firm hereunder shall not have any significant relationship with any
Party.
Section 1.3. "Accounting Principles," with respect to any person,
shall mean the following: (i) each accounting term used herein shall have the
meaning that is applied thereto in accordance with GAAP, unless a different
meaning is set forth herein for such term; (ii) the calculation of the levels of
the accounts shall be done based on a consistent application of accounting
principles as utilized in the preparation of the most recent balance sheet of
such person included in the Schedules hereto, including with respect to the
nature or classification of accounts, closing proceedings, levels of reserves or
levels of accruals, other than as a result of objective changes in the
underlying business or, for all purposes except for calculating the Estimated
ACL Amount, the Estimated NMI Holdings Amount, the ACL Amount, the NMI Holdings
Amount (and all components of any of the foregoing) and the adjustment
contemplated by Section 2.4, as may be required by GAAP or applicable law; and
(iii) for purposes of the preceding clause, the "consistent application of
accounting principles" shall exclude changes in accounting principles, policies,
practices, procedures or methodologies with respect to financial statements,
their classification or their presentation, as well as all changes in practices,
methods, conventions or assumptions used in making accounting estimates.
Notwithstanding the foregoing, for the purposes of calculating the Estimated ACL
Amount, the Estimated NMI Holdings Amount, the ACL Amount, the NMI Holdings
Amount (and all components of any of the foregoing) and the adjustment
contemplated by Section 2.4, the "Accounting Principles" shall mean GAAP as
modified by the rules and bases of accounting specifically described in the ACL
Pro Forma Balance Sheet or the NMI Pro Forma Balance Sheet, as applicable.
Section 1.4. "ACL" shall have the meaning set forth in the first
paragraph hereof.
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Section 1.5. "ACL Amount" shall mean the level of Working Capital of
ACL and ACL Holdings (without duplication) as of the Closing Date minus the ACL
Target WC Level (such number to be either positive or negative), provided that,
if the ACL Amount shall be a positive number greater than $3,000,000, then the
"ACL Amount" shall be $3,000,000, and provided further that, if both the ACL
Amount and the NMI Holdings Amount are negative numbers, then the ACL Amount
(for purposes of Section 2.4 and the calculation of the Estimated ACL Amount)
shall be (A) if the ACL Amount is more negative than the NMI Holdings Amount,
the ACL Amount less the NMI Holdings Amount and (B) if the NMI Holdings Amount
is more negative than the ACL Amount, zero (together with the setoff
contemplated by the definition of NMI Holdings Amount, the "Setoff").
Section 1.6. "ACL Assumed Funded Debt" shall have the meaning set
forth in Section 2.1(d).
Section 1.7. [intentionally omitted].
Section 1.8. "ACL Balance Sheet" shall have the meaning set forth in
Section 3.3(a).
Section 1.9. "ACL Current Employees" shall have the meaning set forth
in Section 3.17(a).
Section 1.10. "ACL Employee Benefit Plans" shall have the meaning set
forth in Section 3.17(a).
Section 1.11. "ACL Employees" shall have the meaning set forth in
Section 3.17(a).
Section 1.12. "ACL Excluded Assets" shall mean those assets of ACL
listed on Schedule 1.12.
Section 1.13. "ACL Excluded Liabilities" shall mean those liabilities
of ACL listed on Schedule 1.13, including all Funded Debt of ACL other than ACL
Assumed Funded Debt.
Section 1.14. "ACL Financial Statements" shall have the meaning set
forth in Section 3.3(a).
Section 1.15. "ACL Fixed Assets" shall have the meaning set forth in
Section 3.13(a).
Section 1.16. "ACL Foreign Plans" shall have the meaning set forth in
Section 3.17(g).
Section 1.17. "ACL Former Employees" shall have the meaning set forth
in Section 3.17(a).
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Section 1.18. "ACL Holdings" shall have the meaning set forth in the
first paragraph hereof.
Section 1.19. "ACL Holdings Indemnified Party" shall have the meaning
set forth in Section 10.2(a).
Section 1.20. "ACL Holdings Savings Plan" shall have the meaning set
forth in Section 6.3(a).
Section 1.21. "ACL Income Statement" shall have the meaning set forth
in Section 3.3(a).
Section 1.22. "ACL Indebtedness" shall have the meaning set forth in
Section 3.12(a).
Section 1.23. "ACL Intellectual Property Rights" shall have the
meaning set forth in Section 3.16(a).
Section 1.24. "ACL Leased Real Property" shall have the meaning set
forth in Section 3.5(a).
Section 1.25. "ACL Leases" shall have the meaning set forth in Section
3.5(a).
Section 1.26. "ACL Licenses" shall have the meaning set forth in
Section 3.8(a).
Section 1.27. "ACL Litigation" shall have the meaning set forth in
Section 3.7.
Section 1.28. "ACL Multiemployer Plan" shall have the meaning set
forth in Section 3.17(h).
Section 1.29. "ACL-Only Employee Benefit Plans" shall have the meaning
set forth in Section 3.17(a).
Section 1.30. "ACL Owned Real Property" shall have the meaning set
forth in Section 3.5(a).
Section 1.31. "ACL Permitted Encumbrances" shall mean (i) those
Encumbrances listed in Schedule 3.5, (ii) liens for current ad valorem taxes not
yet due and payable and (iii) such Encumbrances not known to ACL or such
Encumbrances as do not have a material adverse effect on ACL.
Section 1.32. "ACL Pro Forma Balance Sheet" shall have the meaning set
forth in Section 3.3(b)
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Section 1.33. "ACL Pro Forma Transactions" shall have the meaning set
forth in Section 3.3(b).
Section 1.34. "ACL Savings Plan Employee" shall have the meaning set
forth in Section 6.3(b).
Section 1.35. "ACL Target WC Level" shall mean a Working Capital level
of $43 million.
Section 1.36. "ACL Transfer Date" shall have the meaning set forth in
Section 6.3(b).
Section 1.37. "Acquisition Proposal" shall have the meaning set forth
in Section 5.10.
Section 1.38. "Action" shall mean any actual or threatened action,
suit, arbitration, inquiry, proceeding or investigation.
Section 1.39. "Adverse Consequences" shall mean all Actions, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,
and all actual damages, dues, penalties, fines, costs, amounts paid in
settlement, liabilities, obligations, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses, provided
that: (i) Adverse Consequences shall not include any lost profits or any
exemplary, punitive, consequential or other similar damages (other than
exemplary, punitive, consequential or other similar damages actually awarded to
a third party in an Action); (ii) Adverse Consequences shall not be determined
through any multiple of earnings approach or variant thereof; (iii) the ACL
Holdings Indemnified Parties shall not be deemed to have suffered any Adverse
Consequences with respect to any matter for which (and to the extent of) a
specific reserve or accrual of liabilities was established and reflected on the
ACL Financial Statements or the Vectura Financial Statements, as the case may
be, attached hereto or was established since the date of the most recent of such
statements in the ordinary course consistent with past practice and exists on
the relevant books and records as of the date hereof or, with respect to a
current liability reserve or accrual of current liabilities which is included in
Working Capital, as of the Closing Date by ACL or by NMI Holdings (in each case,
other than in respect of the Vectura Matter, Vectura Excluded Liabilities or the
ACL Excluded Liabilities) to the extent of such reserve or accrual of
liabilities; (iv) in determining Adverse Consequences, the Parties shall make
appropriate adjustments for insurance and indemnity recoveries actually received
by the relevant Indemnified Party (net of any out-of-pocket expenses, including
court costs and reasonable attorneys' fees and expenses, incurred in pursuing
such insurance and indemnity recoveries), under any indemnification or setoff
available under acquisition agreements with third parties, and under any
underground storage tank or similar environmental reimbursement program, and
provided further that Adverse Consequences shall not include (i) the loss of any
Tax attribute or (ii) any Tax liability resulting from the receipt of any
indemnification payment made under this Agreement
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but shall be net of any (iii) Tax benefit, and provided further that, in respect
of environmental matters, "Adverse Consequences" shall not include any
environmental investigation, cleanup or other related costs or expenses unless
such costs or expenses were incurred to comply with any applicable Environmental
Law, or to respond to any other legal obligation (including any order or
directive of a Governmental Authority) or, if voluntarily incurred, only those
expenditures necessary to xxxxx a risk or other threat to health or the
environment.
Section 1.40. "Affiliate" (and, with a correlative meaning,
"Affiliated") shall mean, with respect to any person, any other person that
directly, or through one or more intermediaries, controls or is controlled by or
is under common control with such person, and, if such a person is an
individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any person who is
controlled by any such member or trust. As used in this definition, "control"
(including, with correlative meanings, "controlled" and "under common control
with") shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
Section 1.41. "Agreement" shall have the meaning set forth in the
first paragraph hereof.
Section 1.42. "Antitrust Laws" shall mean and include the Xxxxxxx Act,
as amended, the Xxxxxxx Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state, foreign and
multinational (including European Community) statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
Section 1.43. "Assumed Vectura Employee Benefit Plans" shall have the
meaning set forth in Section 6.2(a).
Section 1.44. "Barging Liabilities" shall mean all liabilities arising
from or incidental to the barging business of Vectura and its Subsidiaries as
conducted as of the date hereof.
Section 1.45. "Business" shall have the meaning set forth in Section
5.9(a).
Section 1.46. "Claimant" shall have the meaning set forth in Section
10.9.
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Section 1.47. "Closing" (and, with a correlative meaning, "Close")
shall mean the consummation of the Recapitalization Transactions.
Section 1.48. "Closing Date" shall mean the date which is two business
days from the date on which the conditions set forth in Articles VIII and IX
shall be satisfied or duly waived, or, if the Parties agree on a different date,
the date upon which they have mutually agreed.
Section 1.49. "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
Section 1.50. "Confidentiality Agreement" shall have the meaning set
forth in Section 5.1(b).
Section 1.51. "Continuation Period" shall have the meaning set forth
in Section 6.2(b).
Section 1.51a. "Controlling Party" shall have the meaning set forth in
Section 7.8(b).
Section 1.52. "CSX" shall have the meaning set forth in the first
paragraph hereof.
Section 1.53. "CSX Savings Plan" shall have the meaning set forth in
Section 6.3(a).
Section 1.54. "CTC" shall have the meaning set forth in Section
12.2(b).
Section 1.55. "Current Portion of Long-Term Debt" shall mean the
principal amount of any current portion of long-term Funded Debt, as determined
in accordance with the Accounting Principles.
Section 1.56. "CVC" shall have the meaning set forth in Section
5.1(b).
Section 1.57. "Encumbrances" shall mean mortgages, liens,
encumbrances, security interests, covenants, conditions, restrictions,
rights-of-way, easements, encroachments, options, rights of first offer, rights
of first refusal, claims and any other matters affecting title.
Section 1.58. "Environmental Law" shall have the meaning set forth in
Section 3.14(d).
Section 1.59. "Equity Contribution" shall have the meaning set forth
in Section 2.1(h).
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Section 1.60. "Equity Letters" shall have the meaning set forth in
Section 4.20.
Section 1.61. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor thereto.
Section 1.62. "Estimated ACL Amount" shall mean an estimate,
reasonably prepared by CSX and not unreasonably disagreed with by Vectura, to be
finalized at least two business days prior to the Closing Date, of the ACL
Amount, provided that, if Vectura reasonably disagrees with such estimate, the
level of Working Capital of ACL as of the end of the month immediately preceding
the Closing Date (as reflected on financial statements delivered pursuant to
Section 5.6), giving effect to the ACL Pro Forma Transactions, shall be the
level of Working Capital of ACL as of the Closing Date for purposes of
calculating the Estimated ACL Amount.
Section 1.63. "Estimated NMI Holdings Amount" shall mean an estimate,
reasonably prepared by Vectura and not unreasonably disagreed with by CSX, to be
finalized at least two business days prior to the Closing Date, of the NMI
Holdings Amount, provided that, if CSX reasonably disagrees with such estimate,
the level of Working Capital of NMI Holdings as of the end of the month
immediately preceding the Closing Date (as reflected on financial statements
delivered pursuant to Section 5.6), shall be the level of Working Capital of NMI
Holdings as of the Closing Date for purposes of calculating the Estimated NMI
Holdings Amount.
Section 1.64. "Final Statement" shall have the meaning set forth in
Section 2.4(a).
Section 1.65. "Financing Letters" shall have the meaning set forth in
Section 4.20.
Section 1.66. "Funded Debt," as of any date, shall mean, without
duplication, the aggregate amount of all obligations due as of such date under
indebtedness for borrowed money and capitalized leases (as determined in
accordance with GAAP), including any guarantees of the same, including all
obligations for principal, interest, premiums, fees, expenses, over advances,
overdrafts, breakage costs and indemnities due as of such date thereunder.
"Funded Debt", when used in connection with Vectura or its Subsidiary, shall
also include those items set forth on Schedule 1.66.
Section 1.67. "GAAP" shall mean United States generally accepted
accounting principles, as in effect from time to time, consistently applied.
Section 1.68. "Government Authority" shall mean any government or
state (or any subdivision thereof), whether domestic, foreign or multinational
(including European Community), or any agency, authority, bureau, commission,
department or similar body or instrumentality thereof, or any governmental court
or tribunal.
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Section 1.69. "Hazardous Material" shall have the meaning set forth in
Section 3.14(d).
Section 1.70. "hereof," "herein," and "herewith" shall have the
meaning set forth in Section 12.9(a).
Section 1.71. "High Yield Letters" shall have the meaning set forth in
Section 4.20.
Section 1.72. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
Section 1.73. "including" shall have the meaning set forth in Section
12.9(a).
Section 1.74. "Income Taxes" shall have the meaning set forth in
Section 7.2(a).
Section 1.75. "Indemnified Party" shall mean any person entitled to
indemnification pursuant to Article X.
Section 1.76. "Indemnifying Party" shall mean any person providing
indemnification pursuant to Article X.
Section 1.77. "Initial Funding Amount" shall mean (i) $695,000,000
plus (ii) the Estimated ACL Amount minus (iii) the amount as of the Closing Date
of all Funded Debt of ACL other than any ACL Assumed Funded Debt.
Section 1.78. "Initial Statement" shall have the meaning set forth in
Section 2.4(a).
Section 1.79. "Intellectual Property Rights" shall mean all patents
and patent applications; inventions (whether or not patentable and whether or
not reduced to practice), trademarks, service marks, trade names and corporate
names and the goodwill associated therewith; and registered and unregistered
copyrights, and registrations, applications and renewals for any of the
foregoing.
Section 1.80. "IRS" shall mean the United States Internal Revenue
Service.
Section 1.81. "Marked Materials" shall have the meaning set forth in
Section 5.12.
Section 1.82. "material," "materially," "material adverse change" and
"material adverse effect" shall have the respective meanings set forth in
Section 12.9(b).
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Section 1.83. "Multiemployer Plan" shall have the meaning set forth in
Section 3.17(c).
Section 1.84. "NBL" shall mean NBL, Inc., a Louisiana corporation.
Section 1.85. "NMI" shall have the meaning set forth in the first
paragraph hereof.
Section 1.86. "NMI Holdings" shall have the meaning set forth in the
recitals hereof.
Section 1.87. "NMI Holdings Amount" shall mean the level of Working
Capital of NMI Holdings as of the Closing Date minus the NMI Holdings Target WC
Level (such number to be either positive or negative), provided that, if the NMI
Holdings Amount shall be a positive number, the "NMI Holdings Amount" shall be
zero, and provided further that, if both the ACL Amount and the NMI Holdings
Amount are negative numbers, then the NMI Holdings Amount (for purposes of
Section 2.4 and the calculation of the Estimated NMI Holdings Amount) shall be
(A) if the NMI Holdings Amount is more negative than the ACL Amount, the NMI
Holdings Amount less the ACL Amount and (B) if the ACL Amount is more negative
than the NMI Holdings Amount, zero (together with the setoff contemplated by the
definition of ACL Amount, the "Setoff").
Section 1.88. "NMI Holdings Target WC Level" shall mean a Working
Capital deficit of $1.5 million.
Section 1.89. "NMI Pro Forma Balance Sheet" shall have the meaning set
forth in Section 4.3(b).
Section 1.90. "NMI Pro Forma Financial Statements" shall have the
meaning set forth in Section 4.3(b).
Section 1.91. "Noncompete Period" shall have the meaning set forth in
Section 5.9(a).
Section 1.91a. "Noncontrolling Party" shall have the meaning set forth
in Section 7.8(b).
Section 1.92. "Non-Qualified Plans" shall have the meaning set forth
in Section 6.2(b).
Section 1.93. "Notice of Disagreement" shall mean a written notice of
disagreement with an Initial Statement.
Section 1.94. "or" shall have the meaning set forth in Section
12.9(a).
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Section 1.95. "ordinary course consistent with past practice" shall
include, with respect to any of ACL Holdings, the Vectura Parties, NMI Holdings
or ACL, and their respective Subsidiaries, actions taken or not taken in the
ordinary course consistent with past practice, including with respect to the
predecessor(s) to such entity.
Section 1.96. "Parties" shall have the meaning set forth in the first
paragraph hereof.
Section 1.97. "Party Indemnified Party" shall have the meaning set
forth in Section 10.5.
Section 1.98. "person" shall mean any individual, corporation, limited
liability company, partnership, joint venture, trust, unincorporated
organization, other form of business or legal entity or Government Authority.
Section 1.99. "Recapitalization Transactions" shall mean the
transactions set forth in Section 2.1.
Section 1.100. "Request" shall have the meaning set forth in Section
10.9.
Section 1.101. "Release" shall have the meaning set forth in Section
3.14(d).
Section 1.102. "Respondent" shall have the meaning set forth in
Section 10.9.
Section 1.103. "Returns" shall have the meaning set forth in Section
7.2(b).
Section 1.104. "Rules" shall have the meaning set forth in Section
10.9.
Section 1.105. "Senior Credit Letter" shall have the meaning set forth
in Section 4.20.
Section 1.106. "Senior Common Amount" shall have the meaning set forth
in Section 2.1(j).
Section 1.107. "Setoff" shall have the meaning set forth in Section
1.5 and Section 1.87.
Section 1.108. "Subsidiary" of any person shall mean any corporation,
partnership, limited liability company or other business entity of which at
least a majority of the outstanding capital stock (or similar interests) having
voting power under ordinary circumstances to elect directors (or similar
governing body members)
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shall at the time be held, directly or indirectly, by such person or by such
person and one or more Subsidiaries of such person.
Section 1.109. "Taxes" shall have the meaning set forth in Section
7.2(c).
Section 1.110. "Taxing Authority" shall have the meaning set forth in
Section 7.2(d).
Section 1.111. "to the knowledge of ACL" shall have the meaning set
forth in Section 12.9(a).
Section 1.112. "to the knowledge of any Vectura Party" shall have the
meaning set forth in Section 12.9(a).
Section 1.113. "Total Current Assets" shall mean, for any person at
any date, the total consolidated current assets of such person and its
Subsidiaries at such date, other than any ACL Excluded Assets or Vectura
Excluded Assets, as applicable, determined in accordance with the Accounting
Principles.
Section 1.114. "Total Current Liabilities" shall mean, for any person
at any date, the total consolidated current liabilities of such person and its
Subsidiaries at such date, other than any ACL Excluded Liabilities or Vectura
Excluded Liabilities, as applicable, excluding the Current Portion of Long-Term
Debt, determined in accordance with the Accounting Principles.
Section 1.115. "Transferred ACL Subsidiaries" shall mean ACL and each
Subsidiary of ACL.
Section 1.116. "Transferred Foreign ACL Subsidiaries" shall mean each
Subsidiary of ACL organized in a jurisdiction outside the United States.
Section 1.117. "Transferred NMI Holdings Subsidiaries" shall mean NMI
Holdings and each of its Subsidiaries.
Section 1.118. [intentionally omitted].
Section 1.119. "Vectura" shall have the meaning set forth in the first
paragraph hereof.
Section 1.120. "Vectura Balance Sheet" shall have the meaning set
forth in Section 4.3(a).
Section 1.121. "Vectura Continuing Employees" shall have the meaning
set forth in Section 6.2(a).
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Section 1.122. "Vectura Current Employees" shall have the meaning set
forth in Section 4.17(a).
Section 1.123. "Vectura Employee Benefit Plans" shall have the meaning
set forth in Section 4.17(a).
Section 1.124. "Vectura Employees" shall have the meaning set forth in
Section 4.17(a).
Section 1.125. "Vectura Excluded Assets" shall mean (i) the capital
stock of each Vectura Excluded Subsidiary (and NMI and NBL) and (ii) those
assets of Vectura or its Subsidiary listed on Schedule 1.125.
Section 1.126. "Vectura Excluded Liabilities" shall mean (i) those
liabilities of Vectura and its Subsidiaries listed on Schedule 1.126 or
otherwise noted as Vectura Excluded Liabilities herein, (ii) the Vectura Matter,
(iii) all liabilities of or relating to the Vectura Excluded Subsidiaries, (iv)
all liabilities of Vectura and its Subsidiaries (other than Barging Liabilities
and environmental liabilities relating to the Seneca, Illinois facility of NMI
and up to $30,000 per year of actual, out-of-pocket environmental monitoring
costs related to the landfill in Marietta, Ohio owned by EPS, Inc.) and (v) all
Funded Debt of Vectura or its Subsidiaries other than the Vectura Assumed Funded
Debt.
Section 1.127. "Vectura Excluded Subsidiaries" shall mean EPS, Inc.,
Houston Integrated Marine Corp., Houston Integrated Marine Services Corp.,
Maritrend, Inc., Vectura Cargo Services, Inc., VCS Realty Corp., Trustman
Maritime Services Corporation, VGI Marine Services Corporation and N.M.I. Realty
Corporation.
Section 1.128. "Vectura Financial Statements" shall have the meaning
set forth in Section 4.3(a).
Section 1.129. "Vectura Fixed Assets" shall have the meaning set forth
in Section 4.13.
Section 1.130. "Vectura Foreign Plans" shall have the meaning set
forth in Section 4.17(g).
Section 1.131. "Vectura Former Employees" shall have the meaning set
forth in Section 4.17(a).
Section 1.132. "Vectura Income Statement" shall have the meaning set
forth in Section 4.3(a).
Section 1.133. "Vectura Indebtedness" shall have the meaning set forth
in Section 4.12(a).
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Section 1.134. "Vectura Intellectual Property Rights" shall have the
meaning set forth in Section 4.16(a).
Section 1.135. "Vectura Leased Real Property" shall have the meaning
set forth in Section 4.5(a).
Section 1.136. "Vectura Leases" shall have the meaning set forth in
Section 4.5(a).
Section 1.137. "Vectura Licenses" shall have the meaning set forth in
Section 4.8(a).
Section 1.138. "Vectura Litigation" shall have the meaning set forth
in Section 4.7.
Section 1.139. "Vectura Matter" shall mean all loss or liability in
connection with or relating to any dispute or claim concerning the ownership, or
transactions in the capital stock or derivatives thereof, of Vectura or its
Subsidiary.
Section 1.140. "Vectura Multiemployer Plan" shall have the meaning set
forth in Section 4.17(h).
Section 1.141. "Vectura-Only Employee Benefit Plans" shall have the
meaning set forth in Section 4.17(a).
Section 1.142. "Vectura Owned Real Property" shall have the meaning
set forth in Section 4.5(a).
Section 1.143. "Vectura Assumed Funded Debt" shall mean the Funded
Debt of Vectura or its Subsidiary set forth on Schedule 1.143, the repayment
obligations with respect to which shall not exceed $75 million in cash.
Section 1.144. "Vectura Parties" shall have the meaning set forth in
the first paragraph hereof.
Section 1.145. "Vectura Permitted Encumbrances" shall mean (i) those
Encumbrances listed in Schedule 4.5, (ii) liens for current ad valorem taxes not
yet due and payable and (iii) such Encumbrances not known to Vectura or such
Encumbrances as do not have a material adverse effect on Vectura.
Section 1.146. "Vectura Savings Plan" shall have the meaning set forth
in Section 6.3(a).
Section 1.147. "WARN Act" shall have the meaning set forth in Section
6.5.
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Section 1.148. "Working Capital" shall mean, at any date, in the case
of NMI Holdings, the amount of Total Current Assets minus the amount of Total
Current Liabilities at such date; and, in the case of ACL and ACL Holdings, the
amount of Total Current Assets minus the amount of Adjusted Total Current
Liabilities at such date; and, for purposes of the foregoing, Adjusted Total
Current Liabilities shall mean the amount of Total Current Liabilities minus the
amount of the line item entitled "Due To Affiliates" (other than that portion
representing federal Taxes), without duplication; in all cases calculated in
accordance with the Accounting Principles (and which shall exclude any accrual
with respect to the lease contemplated by Section 3.15).
ARTICLE II
CONSUMMATION OF RECAPITALIZATION TRANSACTIONS; CLOSING
Section 2.1. Recapitalization Transactions. On or prior to the
Closing Date, and subject to the terms and conditions set forth in this
Agreement:
Preliminary Transactions.
(a) Vectura and its Subsidiaries shall organize NMI Holdings,
and shall cause to be transferred to NMI Holdings, and to one or more other
Delaware limited liability companies wholly owned by NMI Holdings, all assets
and liabilities of NMI and all assets and liabilities of Vectura and its
Subsidiaries other than any Vectura Excluded Assets and Vectura Excluded
Liabilities.
(b) Each corporate Subsidiary of ACL (other than any
Transferred Foreign ACL Subsidiary), and each corporate Subsidiary of NMI
Holdings (if any), shall be merged with and into a separate limited liability
company organized under the laws of the State of Delaware.
(c) ACL Holdings shall be recapitalized as set forth herein
and its operative documents shall contain the terms set forth on Exhibit A
hereto and such other terms as reasonably may be agreed by the Parties.
(d) CSX shall repay, or shall provide funds to ACL to repay,
all Funded Debt of ACL other than the Funded Debt of ACL set forth on Schedule
2.1(d) (which shall be assumed by ACL Holdings) ("ACL Assumed Funded Debt").
(e) [intentionally omitted].
Acquisitions, Conveyances and Transfers.
(f) CSX (or its Subsidiary) shall exchange its membership
interests in ACL Holdings for the consideration set forth below (it being
understood that CSX (or its Subsidiary) shall retain all ACL Excluded Assets and
ACL Excluded Liabilities).
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(g) NMI shall convey, assign, transfer and deliver to ACL
Holdings (and ACL Holdings shall convey, assign, transfer and deliver to ACL),
and ACL Holdings shall acquire from NMI (and ACL shall acquire from ACL
Holdings), all of Vectura's and its Subsidiaries' right, title and interest in
and to the membership interests in NMI Holdings in exchange for the
consideration set forth below (it being understood that the Vectura Parties
shall retain all Vectura Excluded Assets and all Vectura Excluded Liabilities).
(h) Vectura shall make an equity contribution (the "Equity
Contribution") to ACL Holdings in an amount of not less than $60 million.
Consideration.
(i) CSX (or any Subsidiary of CSX as CSX may designate) shall
receive:
(i) cash in the amount of the Initial Funding Amount
by wire transfer of immediately available funds to the account
or accounts specified by written notice delivered to Vectura
at least two business days prior to the Closing (which cash
shall represent the proceeds of borrowing by ACL Holdings or
its Subsidiary);
(ii) Senior Preferred Membership Interests in ACL
Holdings representing a $115,000,000 aggregate capital
interest in ACL Holdings;
(iii) Junior Preferred Membership Interests in ACL
Holdings representing a $39,656,364 aggregate capital interest
in ACL Holdings; and
(iv) Junior Common Membership Interests in ACL
Holdings representing a $343,636 aggregate capital interest in
ACL Holdings and, at Closing, a 34.36% residual future profits
interest in ACL Holdings (without giving effect to issuances
of equity securities to ACL management (the dilution of which
shall be borne pro rata)).
(i) NMI shall receive:
(i) Junior Preferred Membership Interests in ACL
Holdings representing a $1,500,000 aggregate capital interest
in ACL Holdings (which aggregate capital interest shall be (y)
reduced as set forth herein by the Estimated NMI Holdings
Amount (if negative) and (z) subject to further adjustment
pursuant to Section 2.4(c)).
(ii) Senior CSommon Membership Interests in ACL
Holdings representing a (A) $3,389,091 aggregate capital
interest and a (B) $32,500,000 aggregate future profits
interest in ACL Holdings (which
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future profits interest shall be (x) reduced as set forth
herein by the Estimated NMI Holdings Amount (if negative) if
and after the Junior Preferred Membership Interests held by
NMI have been reduced to zero, (y) increased by any amount by
which the Vectura Assumed Funded Debt is less than $75 million
and (z) subject to further adjustment pursuant to Section
2.4(c)) (such amount in this clause (B), the "Senior Common
Amount"); and
(iii) Junior Common Membership Interests in ACL
Holdings representing a $110,909 aggregate capital interest
and, at Closing, a 11.09% residual future profits interest in
ACL Holdings (without giving effect to issuances of equity
securities to ACL management (the dilution of which shall be
borne pro rata)).
(k) Vectura shall receive:
(i) Junior Preferred Membership Interests in ACL
Holdings representing a $59,454,545 aggregate capital interest
in ACL Holdings; and
(ii) Junior Common Membership Interests in ACL
Holdings representing a $545,455 aggregate capital interest in
ACL Holdings and, at Closing, a 54.55% residual future profits
interest in ACL Holdings (without giving effect to issuances
of equity securities to ACL management (the dilution of which
shall be borne pro rata)).
(l) ACL Holdings shall assume the Vectura Assumed Funded Debt
and shall thereafter, on the Closing Date, repay the Vectura Assumed Funded Debt
by wire transfer of immediately available funds to the accounts of the sources
of financing of the Vectura Assumed Funded Debt specified by written notice
delivered by Vectura to CSX at least two business days prior to the Closing.
Section 2.2. Closing Documents. (a) In addition to the other
things required to be done hereunder, at the Closing, CSX shall deliver or cause
to be delivered to the Vectura Parties the following: (i) a certificate, dated
the Closing Date and validly executed on behalf of CSX, to the effect that the
condition set forth in Section 8.1 has been satisfied; (ii) a copy of the
resolutions of the Board of Directors of CSX authorizing the execution, delivery
and performance of this Agreement by CSX, together with a certificate of the
secretary or assistant secretary of CSX, dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and effect; (iii) evidence
or copies of any consents, approvals, orders, qualifications or waivers required
pursuant to Section 8.2; (iv) resignations of employees of CSX who will not be
employees of ACL Holdings or its Subsidiary following the Closing as directors
or officers of ACL or its Subsidiary, as may be reasonably requested by the
Vectura Parties; (v) an opinion of the assistant general counsel of CSX in
substance as set forth
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on Exhibit B hereto, dated as of the Closing Date and addressed to the Vectura
Parties; and (vi) such other instruments of conveyance, assignment, transfer and
delivery as may be reasonably requested by the Vectura Parties and as may be
necessary or appropriate to confirm or carry out the provisions of this
Agreement.
(b) In addition to the other things required to be done
hereunder, at the Closing, each Vectura Party shall deliver or cause to be
delivered to CSX the following: (i) a certificate, dated the Closing Date and
validly executed on behalf of such Vectura Party, to the effect that the
condition set forth in Section 9.1 shall have been satisfied; (ii) a copy of the
resolutions of the Board of Directors and stockholders of such Vectura Party
authorizing the execution, delivery and performance of this Agreement by such
Vectura Party, together with a certificate of the secretary or assistant
secretary of such Vectura Party, dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and effect; (iii) evidence
or copies of any consents, approvals, orders, qualifications or waivers required
pursuant to Section 9.2; (iv) resignations of employees of the Vectura Parties
who will not be employees of ACL Holdings or its Subsidiary following the
Closing as directors or officers of NMI or its Subsidiary, as may be reasonably
requested by CSX; (v) an opinion of counsel to the Vectura Parties in substance
as set forth on Exhibit C hereto, dated as of the Closing Date and addressed to
CSX; and (vi) such other instruments as may be reasonably requested by CSX and
as may be necessary or appropriate to confirm or carry out the provisions of
this Agreement.
Section 2.3. Time and Place of Closing. The Closing shall take
place on the Closing Date at 10:00 a.m., New York City time at a location to be
mutually agreed by the Parties.
Section 2.4. Adjustment. (a) Within 90 days after the Closing
Date, (i) CSX shall prepare and deliver to the Vectura Parties a statement
setting forth a calculation of the level of Working Capital of ACL and ACL
Holdings as of the Closing Date and (ii) Vectura shall prepare and deliver to
CSX a statement setting forth a calculation of the level of Working Capital of
NMI Holdings as of the Closing Date (each, an "Initial Statement"). ACL Holdings
shall assist CSX and Vectura in the preparation of the Initial Statements, and
CSX and Vectura shall be provided full access to any properties, books and
records in ACL Holdings possession for such purpose. During the 30 days
immediately following receipt of each Initial Statement, each receiving Party
shall be permitted to review the working papers of the other relating to such
other Party's Initial Statement. An Initial Statement shall become final and
binding upon the Parties (and shall thereupon become a "Final Statement") on the
30th day following receipt thereof by the receiving Party unless such receiving
Party provides to the other a Notice of Disagreement prior to such 30th day. Any
Notice of Disagreement shall specify in reasonable detail the nature of any
disagreement so asserted. If a timely Notice of Disagreement is received by the
applicable Party, then the Initial Statement relating thereto shall become final
and binding upon the Parties (and shall thereupon become a "Final Statement") on
the earlier of (x) the date on
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which the Parties resolve in writing any differences they may have with respect
to any matter specified in the Notice of Disagreement with respect to such
Initial Statement and agree upon a Final Statement and (y) the date on which the
Accounting Firm, after performing appropriate procedures, finally resolves in
writing any matters with respect to such Initial Statement that are in dispute
by providing the Parties with a Final Statement. During the 30 days immediately
following the delivery of a Notice of Disagreement, the Parties shall seek in
good faith to resolve in writing (and thereby agree upon a Final Statement) any
differences which they may have with respect to any matter specified in such
Notice of Disagreement. During such period, the applicable Party shall have
access to the working papers of the other Party prepared in connection with the
preparation of such Notice of Disagreement. At the end of such 30-day period,
the Parties shall submit to the Accounting Firm for review and resolution any
and all matters which remain in dispute and which were included in such Notice
of Disagreement, and, within 30 days of such submission, the Accounting Firm
shall make a final written determination (which shall thereupon become a "Final
Statement"), binding on the Parties, of the level of Working Capital as of the
Closing Date of ACL and ACL Holdings or NMI Holdings, as applicable, which
determination shall be, by line item, at or between the amount of such line item
on the applicable Initial Statement and the amount of such line item on the
applicable Notice of Disagreement. The fees of the Accounting Firm incurred
pursuant to this Section 2.4(a) shall be borne by ACL.
(b) If the ACL Amount reflected on the Final Statement
respecting ACL exceeds the Estimated ACL Amount, ACL shall, and if the Estimated
ACL Amount exceeds the ACL Amount reflected on the Final Statements, CSX shall,
within 10 business days after the Final Statement respecting ACL becomes final
and binding on the Parties, make payment to the other by wire transfer in
immediately available funds of the amount of such excess with interest thereon
at a rate equal to the rate of interest from time to time announced publicly by
Citibank, N.A. as its base rate, calculated on the basis of the actual number of
days elapsed over 365 from and including the Closing Date to and excluding the
date of payment. Notwithstanding anything to the contrary contained herein, in
no event shall the net amount of the payment to CSX under this Section and the
payment to CSX of the Estimated ACL Amount, if any, as part of the Initial
Funding Amount exceed $3,000,000 (plus the interest contemplated hereby, to the
extent applicable).
(c) The aggregate redemption value of Junior Preferred
Membership Interests held by NMI shall be (i) increased (or if the Senior Common
Amount was decreased pursuant to Section 2.1(j)(ii)(B)(x), then the Senior
Common Amount shall be increased first by the amount of any such decrease up to
an aggregate future profits interest of $32,500,000 prior to any increase in the
Junior Preferred Membership Interests held by NMI), for any amount by which the
NMI Holdings Amount reflected on the Final Statement respecting NMI exceeds the
Estimated NMI Holdings Amount or (ii) decreased (or, if the aggregate principal
amount of such NMI Junior Preferred Membership Interests shall be insufficient,
the amount of Senior Common Amount shall be decreased) for any amount by which
the Estimated NMI Holdings Amount exceeds
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the NMI Holdings Amount reflected on the Final Statement respecting NMI within
10 business days after the Final Statement respecting NMI becomes final and
binding on the Parties, by the amount of such excess, with interest thereon at a
rate equal to the rate of interest from time to time announced publicly by
Citibank, N.A. as its base rate, calculated on the basis of the actual number of
days elapsed over 365 from and including the Closing Date to and excluding the
date of such adjustment. Notwithstanding anything to the contrary contained
herein, in no event shall the net amount of the adjustments to the aggregate
principal amount of NMI Junior Preferred Membership Interests and/or Senior
Common Amount held by NMI under this Section or in connection with the Estimated
NMI Holdings Amount be greater than zero (plus the interest contemplated hereby,
to the extent applicable).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CSX
CSX hereby represents and warrants to ACL Holdings and, in the
case of Sections 3.1, 3.18, 3.19, 3.20 and 3.21, to the Vectura Parties, as
follows:
Section 3.1. Incorporation; Authorization; Etc. (a) ACL is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each of ACL's Subsidiaries is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, except as would not have a material adverse effect on ACL. Each of
ACL and each Subsidiary of ACL (i) has all requisite power to own its properties
and assets and to carry on its business as it is now being conducted and (ii) is
in good standing and is duly qualified to transact business in each domestic and
foreign jurisdiction in which the nature of property owned or leased by it or
the conduct of its business requires it to be so qualified, except where the
failure to be in good standing or to be duly qualified to transact business
would not, individually or in the aggregate, have a material adverse effect on
ACL. Attached to Schedule 3.1 is a true and complete list of all Subsidiaries of
ACL as of the date hereof (noting which of such Subsidiaries will not be
Subsidiaries of ACL as of the Closing Date, noting the jurisdiction of
organization of each of such Subsidiaries and noting all domestic and foreign
jurisdictions in which ACL and such Subsidiaries are qualified to transact
business).
(b) CSX has full power to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery of this
Agreement and the performance of CSX's obligations hereunder have been duly and
validly authorized by all necessary proceedings on the part of CSX and no other
proceedings or actions on the part of CSX, its Board of Directors or
stockholders are necessary therefor. The execution, delivery and performance by
CSX of this Agreement will not (i) violate any provision of CSX's or ACL's
Certificate of Incorporation or By-laws or other organizational documents, (ii)
except as disclosed in Schedule 3.1, violate any provision of, or be an event
that is (or with notice or the passage of time or both will result in) a
violation of, or result in the acceleration of or entitle any party to
accelerate
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(whether after the giving of notice or lapse of time or both) any obligation
under, or result in the imposition of any lien, pledge or encumbrance upon or
the creation of a security interest in the assets or properties of ACL or its
Subsidiaries pursuant to, any mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment, injunction, decree, permit or "employee
benefit plan" (as defined in Section 3(3) of ERISA) to which ACL or its
Subsidiary is a party or by which ACL or its Subsidiary is bound and (iii)
except as disclosed in Schedule 3.8, violate or conflict with any statute, rule
or regulation applicable to ACL or its Subsidiary or any of its properties or
assets or any other material restriction of any kind or character to which ACL
or its Subsidiary is subject, that, in the case of clauses (ii) and (iii),
would, individually or in the aggregate, have a material adverse effect on ACL
or would prevent the consummation of the Recapitalization Transactions. This
Agreement has been duly executed and delivered by CSX and, assuming the due
execution and delivery hereof by the other Parties, constitutes the legal, valid
and binding obligation of CSX, enforceable against CSX in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether in equity
or at law).
Section 3.2. Capitalization. Schedule 3.2 lists the number of
authorized and outstanding shares of capital stock or membership interests of
ACL and each Subsidiary of ACL. No stock appreciation right, phantom stock or
similar right is outstanding with respect to any capital stock of ACL or any
Subsidiary of ACL. Except as set forth in Schedule 3.2, all outstanding shares
of capital stock of ACL and each Subsidiary of ACL are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights and owned by CSX
or its Subsidiary, free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on voting
rights, charges and other legal encumbrances. Except as set forth in Schedule
3.2 and except for this Agreement, there are no options, warrants, calls, rights
or agreements to which CSX or any of its Subsidiaries is a party or by which any
of them is bound obligating CSX or any of its Subsidiaries to issue, deliver,
sell, purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of capital stock or other
equity interests of ACL or its Subsidiary, or securities convertible into or
exchangeable for such shares or obligating CSX or its Subsidiary to grant,
extend or enter into any such option, warrant, call, right or agreement. Except
as set forth in Schedule 3.2, there are no outstanding contractual obligations
of CSX or its Subsidiary (i) restricting the transfer of, (ii) affecting the
voting rights of, (iii) requiring the repurchase, redemption or disposition of,
(iv) requiring the registration for sale of or (v) granting any preemptive or
antidilutive right with respect to any shares of capital stock of ACL or its
Subsidiary.
Section 3.3. Financial Statements. (a) Attached to Schedule
3.3 are true and complete copies of the audited consolidated statements of
financial position of ACL and its Subsidiaries as of December 26, 1997, December
27, 1996 and December 29, 1995 and the related audited consolidated statements
of earnings and retained
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earnings and cash flows for the fiscal years ended December 26, 1997, December
27, 1996 and December 29, 1995 together with the respective reports thereon and
certifications thereof by Ernst & Young LLP (collectively, the "ACL Financial
Statements"). Each consolidated statement of financial position included in the
ACL Financial Statements may be hereinafter referred to as an "ACL Balance
Sheet," and each consolidated statement of earnings and retained earnings
included in the ACL Financial Statements may be hereinafter referred to as an
"ACL Income Statement." The ACL Financial Statements have been prepared from and
are consistent with the books and records of ACL and its Subsidiaries.
(b) Attached to Schedule 3.3 is a pro forma consolidated
statement of financial position of ACL and its Subsidiaries (the "ACL Pro Forma
Balance Sheet") as of December 26, 1997, giving effect to the exclusion of the
ACL Excluded Assets and ACL Excluded Liabilities, and the transactions listed in
the notes thereto (such transactions, the "ACL Pro Forma Transactions"). The ACL
Pro Forma Balance Sheet sets forth any deviations from GAAP used in the
preparation thereof.
(c) Except as indicated in Schedule 3.3 or in the ACL
Financial Statements (including any notes thereto), the ACL Financial Statements
were prepared in accordance with GAAP and, in the case of any ACL Balance Sheet,
fairly presents the consolidated financial position of ACL and its Subsidiaries
at the date thereof in all material respects and, in the case of any ACL Income
Statement, fairly presents the consolidated results of operations of ACL and its
Subsidiaries for the periods then ended in all material respects (subject, in
the case of unaudited ACL Financial Statements, to any other adjustments
described therein and normal year-end adjustments in accordance with GAAP which
would not, in the aggregate, have a material adverse effect with respect to
ACL).
Section 3.4. Undisclosed Liabilities. Except as reflected,
reserved against or otherwise disclosed in the ACL Balance Sheet as of December
26, 1997 (and specifically identified and described in the accompanying notes),
and except as set forth in Schedule 3.4, there are no liabilities, debts
(including obligations in respect of capital leases), or obligations of or
claims against ACL or its Subsidiary (other than those incurred in the ordinary
course consistent with past practice) which would, individually or in the
aggregate, have a material adverse effect on ACL and that would have been
required to be reflected on such balance sheet or otherwise specifically
identified and described in the notes thereto in accordance with GAAP.
Section 3.5. Properties. (a) Schedule 3.5 lists all real
property and interests in real property owned by ACL or any of its Subsidiaries
which is material to ACL (the "ACL Owned Real Property") or leased by ACL or any
of its Subsidiaries as lessee or lessor which is material to ACL (the "ACL
Leased Real Property"), such description including, (i) for each ACL Owned Real
Property, the location thereof, the approximate acreage thereof (where
available) and the manner in which such real property is used and (ii) for each
ACL Leased Real Property, an identification of the
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lease agreement therefor (material amendments, modifications, side letters and
other agreements relating to any such lease agreement have been made available
to the Vectura Parties), the annual payment obligation thereon and the location
and approximate size (or other relevant dimension) of the premises leased
thereunder. Except as set forth on Schedule 3.5 and except for ACL Permitted
Encumbrances, ACL or its Subsidiary has good and valid fee title to ACL Owned
Real Property free and clear of all Encumbrances. All leases with respect to ACL
Leased Real Property ("ACL Leases") are in effect and, where ACL or its
Subsidiary is lessee, create a valid and binding interest in ACL Leased Real
Property in favor of ACL or its Subsidiary and, except as set forth in Schedule
3.5, there are no material defaults by the lessor or lessee thereunder
continuing in existence beyond any applicable notice and cure periods, nor, to
the knowledge of ACL, do there exist any circumstances which, with the giving of
notice, the passage of time or both, would become such a default. Other than ACL
or its Subsidiaries and third party lessees, to the knowledge of ACL, there are
no parties in possession or parties having any current or future right to occupy
any ACL Owned Real Property or ACL Leased Real Property, except as would not
have a material adverse effect with respect to ACL. Except as set forth in
Schedule 3.5, there are no condemnation proceedings, special assessments, impact
fees or similar charges pending or, to the knowledge of ACL, threatened in
connection with ACL Owned Real Property or, to the knowledge of ACL, ACL Leased
Real Property, and ACL has not received or been served with any notice with
respect to any of the foregoing. The current use by ACL and its Subsidiaries of
ACL Owned Real Property and ACL Leased Real Property complies in all material
respects with all applicable zoning laws and building and use restrictions
(including all agreements of ACL and its Subsidiaries applicable thereto),
except as would not, individually or in the aggregate, have a material adverse
effect on ACL.
(b) Except as set forth in Schedule 3.5, each ACL Owned Real
Property is in compliance with all material terms of the instruments which
constitute ACL Permitted Encumbrances, and none of the ACL Permitted
Encumbrances materially interferes with the use or operation of ACL Owned Real
Property in the manner in which such property is currently used or operated, and
there is not and has not been any uncured violation of the terms of any ACL
Permitted Encumbrance which would result in a forfeiture or otherwise adversely
affect the property, in any such case, except where the failure to so comply or
such interference and adverse effect would not, together with all other such
failures, interferences and adverse effects, have a material adverse effect on
ACL.
Section 3.6. Absence of Certain Changes. Except as otherwise
set forth in this Agreement, the ACL Financial Statements or Schedule 3.6, from
December 26, 1997 through the date hereof, there has been no material adverse
change in, and there has not been any occurrence which, when taken together with
all other such changes or occurrences, would have a material adverse effect on
ACL. Except as otherwise set forth in this Agreement, the ACL Financial
Statements or Schedule 3.6, from December 26, 1997 through the date hereof, ACL
has taken no action which
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would have required the consent of the Vectura Parties under Section 5.4(a)
hereof were such Section binding with respect to ACL as of such time.
Section 3.7. Litigation; Orders. Except as disclosed in
Schedule 3.7, there are no lawsuits, actions, administrative or arbitration or
other proceedings or Government Authority investigations, pending with respect
to which ACL or its Subsidiary has been duly served or otherwise received notice
as of the date hereof or, to the knowledge of ACL, threatened against ACL or its
Subsidiaries by any person or Government Authority (collectively, "ACL
Litigation") that would, individually or in the aggregate, have a material
adverse effect on ACL or would prevent the consummation of the Recapitalization
Transactions. Except as disclosed in Schedule 3.7, there are no judgments or
orders, injunctions, decrees, stipulations, settlements or awards (whether
rendered by a court or administrative agency, or by arbitration) outstanding
against ACL or its Subsidiary or affecting any of the properties of ACL or its
Subsidiary that would, individually or in the aggregate, have a material adverse
effect on ACL or would prevent the consummation of the Recapitalization
Transactions. Except for those matters disclosed in Schedule 3.7, the aggregate
amount of all claims and judgments pending with respect to which ACL has been
duly served or otherwise received notice as of the date hereof or, to the
knowledge of ACL, threatened against ACL or its Subsidiary would not have,
either individually or in the aggregate, a material adverse effect on ACL.
Section 3.8. Licenses, Approvals, Other Authorizations,
Consents, Reports, Etc. (a) Schedule 3.8 includes all material licenses,
permits, franchises and other authorizations of any Government Authority
possessed by or granted to ACL or its Subsidiary or used in or necessary for the
operation of its business (the "ACL Licenses"). Except as disclosed in Schedule
3.8, all ACL Licenses are in full force and effect except for those whose
failure to be in full force and effect would not, individually or in the
aggregate, have a material adverse effect on ACL. Except as set forth in
Schedule 3.8, ACL or its Subsidiary, as the case may be, is in compliance with
the terms of the ACL Licenses, except where the failure to be in compliance
would not, individually or in the aggregate, have a material adverse effect on
ACL. Except as disclosed in Schedule 3.8, no investigation, review or proceeding
is pending with respect to which ACL has been duly served or otherwise received
notice as of the date hereof or, to the knowledge of ACL, threatened seeking the
revocation or limitation of any such ACL License that, individually or in the
aggregate, would have a material adverse effect on ACL.
(b) Schedule 3.8 lists all registrations, filings,
applications, notices, consents, approvals, orders, qualifications and waivers
required to be made, filed, given or obtained by ACL or its Subsidiary with, to
or from any person (including any Government Authority) in connection with the
Recapitalization Transactions except for with respect to the HSR Act and except
for those the failure to make, file, give or obtain which would not,
individually or in the aggregate, have a material adverse effect on ACL or
prevent consummation of the Recapitalization Transactions.
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Section 3.9. Labor Matters. Except as described in Schedule
3.12(b), ACL and its Subsidiaries have no written contract of employment with
any employee. Except as described in Schedule 3.9, ACL and its Subsidiaries are
not presently a party to any collective bargaining agreement, subject to a legal
duty to bargain with any labor organization on behalf of employees or the object
of any attempt to organize employees for collective bargaining or similar
purposes or presently operating under an expired collective bargaining
agreement. Except as described in Schedule 3.9, ACL and its Subsidiaries are not
a party to or subject to any pending strike or pending work stoppage, organizing
attempt, union certification, picketing, boycott or similar activity. ACL and
its Subsidiaries have complied in all material respects with all applicable
federal, state and local laws, ordinances, rules and regulations and
requirements relating to the employment, payment and termination of labor,
including the provisions thereof relative to wages, hours, severance, layoffs,
vacation, collective bargaining, employee benefits, and employee benefit plans,
contributions, unemployment, withholding taxes and occupational health and
safety and equal opportunity and non-discrimination laws (including the
Americans with Disabilities Act), except as would not have a material adverse
effect on ACL. ACL and its Subsidiaries have made all deductions required by law
to be made for employees' wages and salaries and either remitted the same to
appropriate Government Authorities or provided for the same in its accounts and
is not liable for any arrears of wages or any taxes or penalties for failure to
comply with the payment or repayment of any of the foregoing, except as would
not have a material adverse effect on ACL.
Section 3.10. Compliance with Laws. Except as may be indicated
in Schedule 3.10, the conduct of business by ACL and its Subsidiaries complies
with all statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees of any Government Authority applicable thereto, except for violations or
failures so to comply, if any, that, individually or in the aggregate, would not
have a material adverse effect on ACL.
Section 3.11. Insurance. Schedule 3.11 sets forth a true and
complete list of all insurance policies currently held by ACL and its
Subsidiaries and in force as of the date hereof with respect to the assets,
properties, business, employees, officers, and directors of ACL or its
Subsidiaries, setting forth as to each policy a general description of type of
coverage, carrier, policy number, coverage limit, expiration date, annual
premiums, and deductibles. Such policies are in full force and effect as of the
date hereof, except where the failure of such policies to be in full force and
effect would not have a material adverse effect on ACL; and, except as set forth
in Schedule 3.11, such policies will remain in effect following the Closing or
be replaced by at least substantially comparable policies, except where the
failure of such policies to so remain or be so replaced would not have a
material adverse effect on ACL. The holders of those policies listed on Schedule
3.11 are in compliance with the terms and conditions thereof in all material
respects. As of the date hereof, all premiums covering all periods up to and
including the date hereof have been paid when due except where the
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failure to pay such premiums when due would not have a material adverse effect
on ACL.
Section 3.12. Material Contracts. (a) Except as disclosed in
Schedule 3.12(a), neither ACL nor its Subsidiary is as of the date hereof a
party to any (i) consulting agreement having a remaining term of at least one
year and requiring payments of base salary in excess of $100,000 per year or
aggregate payments of base salary in excess of $150,000, (ii) material sales
representative or agency contract which is not terminable on 12 months' (or
less) notice, (iii) material lease of real or personal property with an annual
base rental obligation of more than $250,000, or a total remaining rental
obligation of more than $1,000,000, (iv) joint venture or partnership agreement,
(v) agreement materially limiting in any way ACL's or its Subsidiary's ability
to compete with any person in any geographic location or any line of business,
(vi) agreement with any Affiliate (other than any agreement between Affiliates,
which will be Subsidiaries of ACL Holdings following the Closing), officer or
director of ACL or its Subsidiary or (vii) other material contract, agreement or
arrangement (including collective bargaining agreements) (other than any barge
charter or barge lease (whether as lessor or lessee) entered into in the
ordinary course of business) requiring future payment or payments in excess of
$3,000,000 per year. Schedule 3.12(a) lists all notes, mortgages, indentures and
other obligations and agreements and other instruments for or relating to any
lending or borrowing (including assumed debt, guarantees, capitalized lease
obligations and other agreement creating a security interest in assets or
properties of ACL or its Subsidiary) of $3,000,000 or more effected by ACL or
its Subsidiary or to which any assets of ACL or its Subsidiary are subject
(except with respect to any such lending or borrowing among ACL and its
Subsidiaries, other than foreign Subsidiaries) (collectively, "ACL
Indebtedness"). With respect to all contracts listed on Schedule 3.9, Schedule
3.12(a) or Schedule 3.12(b), except as disclosed on Schedule 3.9, Schedule
3.12(a) or Schedule 3.12(b), except as would not have a material adverse effect
on ACL: (i) assuming that such contracts are valid and binding on the other
parties thereto, such contracts are valid and binding on ACL or its Subsidiary,
as applicable; (ii) ACL has received no notice to the effect that such contracts
are not valid and binding on the other parties thereto; and (iii) ACL or its
Subsidiary, as applicable, is not in material breach thereof or material default
thereunder, and there does not exist under any provision thereof any event that,
with the giving of notice or the lapse of time or both, would constitute such a
breach or default.
(b) Schedule 3.12(b) sets forth (i) a list of all employment
agreements to which ACL or its Subsidiary is a party having a remaining term of
at least one year and requiring payments of base salary in excess of $100,000
per year or aggregate payments of base salary in excess of $150,000 and (ii) the
number of severance and retention agreements with employees of ACL or its
Subsidiary to which ACL or its Subsidiary is a party and the approximate
aggregate maximum amount of the payments which would be required to be made
thereunder. True and complete copies of all such
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employment and severance and retention agreements have been made available to
the Vectura Parties.
3.13. Fixed Assets. (a) Schedule 3.13 lists (i) all fixed
assets of ACL and its Subsidiaries having a book value as of December 26, 1997
of $3,000,000 or more and (ii) all towboats and barges owned or leased by ACL or
its Subsidiary and used in ACL's business as of the date hereof, together with
the name, dimensions and year of construction of each such towboat and the
number, dimensions, general type and year of construction of each such barge
(collectively, "ACL Fixed Assets"). ACL or its Subsidiary, as applicable, has
good and marketable title to, or, in the case of leased or subleased ACL Fixed
Assets, valid and subsisting leasehold interests in, all ACL Fixed Assets, free
and clear of all Encumbrances other than ACL Permitted Encumbrances, except as
would not have a material adverse effect on ACL. The ACL Pro Forma Balance Sheet
reflects all material assets necessary and sufficient for the conduct of the
business of ACL and its Subsidiaries as conducted by ACL and its Subsidiaries as
of the date hereof (other than leased assets).
(b) Since January 1, 1998, ACL and its Subsidiaries have made
capital expenditures in respect of barges in an amount greater than $12,000,000
in the aggregate.
3.14. Environmental Matters. (a) It is the intention of the
Parties that CSX is making no representation or warranty with respect to
environmental matters except as set forth in this Section 3.14 and that any and
all environmental matters shall be deemed an exception to each other
representation and warranty of CSX contained in this Agreement.
(b) Except as disclosed in Schedule 3.14, to the knowledge of
ACL, (i) ACL and its Subsidiaries have complied and currently comply with
applicable Environmental Laws, except for failures to comply that, individually
or in the aggregate, would not have a material adverse effect on ACL; (ii) ACL
and its Subsidiaries have obtained all environmental consents, approvals,
licenses and permits required for its current operations by any applicable
Environmental Laws, except for failures to obtain that, individually or in the
aggregate, would not have a material adverse effect on ACL; (iii) neither ACL
nor any of its Subsidiaries has received any written notice, claim or report
alleging any material liabilities or potentially material liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise), including any
investigatory, remedial, or corrective obligations arising under Environmental
Laws and for which the alleged liability or potential liability has not been
fully resolved; (iv) none of the following is present at any of the properties
which will be owned or leased by ACL or its Subsidiaries at the time ACL is
transferred to ACL Holdings, except where such presence, individually or in the
aggregate, would not have a material adverse effect on ACL: (A)
asbestos-containing material in any friable form or condition, (B)
polychlorinated biphenyls (PCBs), including any materials or equipment
contaminated with PCBs, (C) underground storage tanks, (D) surface impoundments,
or (E) nonpermitted landfills or other nonpermitted waste disposal areas; and
(v) neither ACL nor any of its Subsidiaries
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has treated, stored, disposed of, arranged for the disposal of, transported,
handled, or released any Hazardous Material, or owned or operated any property
or facility (and no such property or facility is contaminated by any Hazardous
Material) in a manner that has given or would give rise to any liabilities or
any investigative, corrective or remedial obligations, pursuant to CERCLA or any
other Environmental Law, except for any such liabilities or obligations that,
individually or in the aggregate, would not have a material adverse effect on
ACL.
(c) To the knowledge of ACL, CSX has provided to the Vectura
Parties copies of all material or potentially material environmental audits,
assessments, analyses, and reports, and any other documents materially bearing
on environmental liabilities or obligations of ACL or its Subsidiaries which are
in the possession or under the reasonable control of CSX, ACL or any of its
Subsidiaries.
(d) As used in this Agreement, "Environmental Law" means any
and all U.S. and foreign federal, state and local laws, ordinances and
regulations, all other requirements having the force and effect of law, and all
common law, relating to pollution, the protection of the environment, or the
discharge or release of materials into the environment; "Hazardous Material"
means any substance, chemical, compound, product, solid, gas, liquid, waste or
byproduct which is classified or regulated (including without limitation
regulation as "hazardous" or "toxic", or as a "pollutant", "contaminant" or
"waste"), pursuant to any Environmental Law, and includes asbestos, PCBs and
petroleum (including crude oil or any fraction thereof); and "Release" means any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment.
3.15. Affiliate Transactions. At the Closing Date, except for
the transactions listed in Schedule 3.15 and the ACL Pro Forma Transactions, and
except for the lease of assets by CSX to ACL as disclosed prior to the date
hereof (which shall survive and be in effect following the Closing), neither ACL
nor its Subsidiary shall be a party to any contract, agreement or commitment
with CSX or any person which following the Closing, will be a director, officer,
employee, stockholder or Affiliate of CSX or its Subsidiary (assuming that ACL
Holdings and its Subsidiaries are not Affiliates of CSX or its Subsidiary), that
are on terms and conditions in the aggregate materially more burdensome to such
Subsidiary than would be usual and customary in similar contracts, agreements,
commitments, transactions or business arrangements negotiated on an arm's-length
basis among unaffiliated parties.
3.16. Intellectual Property. (a) Schedule 3.16 sets forth a
complete and correct list of all material: (i) patented or registered
Intellectual Property Rights and pending patent applications or other
applications for registrations of Intellectual Property Rights owned or filed by
or on behalf of ACL or its Subsidiary; (ii) computer software owned and/or used
by ACL or its Subsidiary (other than mass-marketed software); and (iii) licenses
or similar agreements or arrangements for
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Intellectual Property Rights to which ACL or its Subsidiary is a party, either
as licensee or licensor (collectively "ACL Intellectual Property Rights").
(b) Except as set forth on Schedule 3.16: (i) ACL or its
Subsidiary owns or possesses all Intellectual Property Rights material to the
operation of its business as conducted as of the date hereof free and clear of
material encumbrances, licenses and other restrictions; (ii) to the knowledge of
ACL, no claim by any third party contesting the validity, enforceability, use or
ownership of any of ACL Intellectual Property Rights owned or used by ACL or its
Subsidiary has been made, is currently outstanding or is threatened; (iii)
neither ACL nor its Subsidiary has received any notices of any infringement or
misappropriation by, or conflict with, any third party with respect to the ACL
Intellectual Property Rights (including any demand or request that ACL or its
Subsidiary license any rights from a third party); and (iv) neither ACL nor its
Subsidiary has infringed, misappropriated or otherwise conflicted with any
Intellectual Property Rights of any third parties, and neither ACL nor its
Subsidiary is aware of any infringement, misappropriation or conflict which will
occur as a result of the continued operation of ACL's business as conducted as
of the date hereof, except, in each of the foregoing (i) through (iv), as would
not have a material adverse effect on ACL.
3.17. Employee Benefit Plans. (a) Schedule 3.17(a) lists (i)
each "employee benefit plan" (as such term is defined in Section 3(3) of ERISA)
at any time contributed to, maintained or sponsored by ACL or any of its
Affiliates, or with respect to which ACL or any of its Affiliates has any
liability or potential liability; and (ii) each other retirement, savings,
deferred compensation, severance, stock, performance, bonus, incentive, or other
material employee benefit plan, policy, or arrangement of any kind, contributed
to, maintained or sponsored by ACL or any of its Affiliates, or with respect to
which ACL or any of its Affiliates has any liability or potential liability; in
each case for the benefit of any current employees (whether active or on leave
of absence) of ACL or any of its Subsidiaries ("ACL Current Employees") or
former employees of ACL or any of its Subsidiaries ("ACL Former Employees" and
together with ACL Current Employees, "ACL Employees") or their respective
beneficiaries and dependents (collectively, "ACL Employee Benefit Plans";
provided that "ACL Employee Benefit Plans" shall not include routine
administrative procedures, government-required programs or ACL Foreign Plans).
Schedule 3.17(a) also specifies which ACL Employee Benefit Plans are maintained
solely by ACL or its Subsidiaries or solely for the benefit of ACL Employees and
their beneficiaries and dependents ("ACL-Only Employee Benefit Plans").
(b) All ACL Employee Benefit Plans and any related trusts are
in compliance in all material respects with and have been administered in
material compliance with the terms of such plans and any applicable collective
bargaining agreements, and all applicable requirements of law and regulations,
including but not limited to the Code and ERISA, and all contributions and
premium payments required to be made by ACL or any of its Affiliates to or on
account of each such ACL
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Employee Benefit Plan under the terms thereof, ERISA or the Code for all periods
of time prior to the date hereof and the Closing Date have been or will be, as
the case may be, made or properly accrued.
(c) Except as set forth in Schedule 3.17(c), with respect to
any ACL Employee Benefit Plan which is intended to qualify under Section 401(a)
of the Code other than a Multi-employer Plan, a favorable determination letter
as to qualification under Section 401(a) of the Code has been issued by the IRS
and the related trust has been determined to be exempt from taxation under
Section 501(a) of the Code and no events or circumstances have occurred that
could be reasonably expected to materially adversely affect the qualified status
of any such plan or trust. Except as set forth in Schedule 3.17(c), no ACL-Only
Employee Benefit Plan is subject to Title IV of ERISA or to Section 412 or 4971
of the Code. Except as set forth in Schedule 3.17(c), no ACL Employee Benefit
Plan is a "multiemployer plan," as defined in Section 3(37) of ERISA (a
"Multiemployer Plan"). Except as set forth in Schedule 3.17(c): with respect to
each ACL-Only Employee Benefit Plan that is subject to Section 412 of the Code
or Title IV of ERISA, there has been no application for or waiver of the minimum
funding standards imposed by Section 412 of the Code with respect to any
ACL-Only Employee Benefit Plan, and there are no facts or circumstances that
would materially change the funded status of any such ACL-Only Employee Benefit
Plan in an adverse manner; no material asset of ACL or its Subsidiaries that is
to be acquired by ACL Holdings, directly or indirectly, pursuant to this
Agreement is subject to any material lien under ERISA or the Code; and there are
no pending or threatened actions, suits, investigations or claims with respect
to any ACL Employee Benefit Plan (other than routine claims for benefits) which
could result in material liability to ACL Holdings or any of its Affiliates
after the Closing.
(d) Except as otherwise set forth in Schedule 3.17(d), neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) materially increase any benefits
otherwise payable under any ACL Employee Benefit Plan or (ii) result in the
acceleration of the time of payment or vesting of any such benefits to any
material extent.
(e) ACL has delivered or made available to the Vectura Parties
a true, correct and complete copy of all plan documents and the current summary
plan descriptions (if any) for each ACL Employee Benefit Plan. In addition, with
respect to each ACL-Only Employee Benefit Plan, ACL has delivered or made
available to Vectura a true, correct and complete copy of: (i) the most recent
Annual Report (Form 5500 Series) and accompanying schedule, if any, or any
similar filing made with any foreign authority; (ii) the most recent annual
financial report, if any; (iii) the most recent actuarial report, if any; and
(iv) the most recent determination letter from the IRS or similar document
issued by any other taxing authority, if any.
(f) No event has occurred and, to the knowledge of ACL, no
circumstances now exist that could be reasonably expected to result in, any
material
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liability under Title IV of ERISA or Section 412 of the Code with respect to any
employee benefit plan sponsored by CSX or any of its Affiliates that would be a
liability of ACL Holdings or any of its Affiliates following the Closing (other
than the payment of contributions and premiums to the Pension Benefit Guaranty
Corporation that are not yet due).
(g) Except as set forth in Schedule 3.17(g), neither ACL nor
any of its Subsidiaries contributes to, maintains or sponsors or has any
liability with respect to any employee benefit plan, agreement or arrangement
applicable to employees of ACL or any Subsidiary located outside the United
States (the "ACL Foreign Plans"). Each ACL Foreign Plan is in compliance in all
material respects with all laws applicable thereto and the respective
requirements of such ACL Foreign Plan's governing documents. There are no
material actions, suits or claims (other than routine claims for benefits) with
respect to any ACL Foreign Plan, and no circumstances exist which could
reasonably be expected to give rise to any such material actions, suits or
claims.
(h) Except as set forth in Schedule 3.17(h): (i) no
Multiemployer Plan in which ACL or any of its Subsidiaries has participated
within the past six years has been terminated; (ii) no proceeding has been
initiated to terminate any Multiemployer Plan that is an ACL Employee Benefit
Plan (an "ACL Multiemployer Plan") and there has been no "reportable event"
(within the meaning of Section 4043(c) of ERISA) with respect to any ACL
Multiemployer Plan within the past six years; (iii) no ACL Multiemployer Plan is
in reorganization as described in Section 4241 of ERISA and no ACL Multiemployer
Plan is insolvent as described in Section 4245 of ERISA; (iv) neither ACL nor
any of its Subsidiaries has incurred any liability on account of a "partial
withdrawal" or a "complete withdrawal" (within the meaning of Sections 4205 and
4203, respectively, of ERISA) from any Multiemployer Plan that has not been
satisfied in full, no such liability has been asserted that has not been
satisfied in full, and there do not now exist any events or circumstances which
could result in any such partial or complete withdrawal; and (v) neither ACL nor
any of its Subsidiaries is bound by any contract or agreement or has any
obligation or liability described in Section 4204 of ERISA.
(i) Except as set forth in Schedule 3.17(i): (i) ACL and its
Subsidiaries have complied with the health care continuation requirements of
Part 6 of Subtitle B of Title I of ERISA; and (ii) neither ACL nor any of its
Subsidiaries has any obligation under any ACL Employee Benefit Plan or otherwise
to provide medical, dental or life insurance benefits to ACL Former Employees or
to any other person, except as specifically required by Part 6 of Subtitle B of
Title I of ERISA and except in the amounts appropriately reflected on the
appropriate ACL Balance Sheet.
3.18. Brokers, Finders, Etc. Neither CSX nor its Affiliate has
employed any broker, finder, consultant or other intermediary in connection with
the Recapitalization Transactions who would have a valid claim for a fee or
commission
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from any Vectura Party, ACL Holdings or any Subsidiary of ACL Holdings in
connection with the Recapitalization Transactions.
3.19. Acquisition for Investment. CSX confirms that it has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the transactions contemplated
hereby, including any acquisition of securities hereunder. CSX is acquiring the
securities to be acquired by it hereunder for investment and not with a view
toward or for sale in connection with any distribution thereof, or with any
present intention of distributing or selling such securities within the meaning
of the Securities Act of 1933, as amended. CSX understands and agrees that such
securities may not be sold, transferred, offered for sale, pledged, hypothecated
or otherwise disposed of without registration under the Securities Act of 1933,
as amended, except pursuant to an exemption from such registration available
under such Act, and without compliance with state, local and foreign securities
laws, in each case, to the extent applicable.
3.20. Qualifications of ACL. ACL is a "Citizen of the United
States" within the meaning of Section 2 of the Shipping Act of 1916, as amended
(42 U.S.C. 802), and is qualified to enter into this Agreement and to acquire an
ownership interest in marine vessels, and the provisions of said Act imposing
restrictions upon transfers to persons other than Citizens of the United States
and any proclamations, orders or regulations thereunder are inapplicable to ACL
and the transactions contemplated hereby.
3.21. No Outside Reliance. Notwithstanding anything contained
in this Article III or any other provision hereof, it is the explicit intent of
each Party that CSX is making no representation or warranty whatsoever, express
or implied, beyond those expressly given in this Agreement, including any
implied warranty or representation as to condition, seaworthiness,
merchantability, suitability or fitness for a particular purpose as to any
assets of ACL or its Subsidiaries. Without limiting the generality of the
foregoing, it is understood that any cost estimates, financial or other
projections or other predictions contained or referred to in the Schedules
hereto and any cost estimates, projections or predictions or any other
information contained or referred to in other materials or oral presentations
that have been or shall hereafter be provided to any Vectura Party or any of its
Affiliates, agents or representatives are not and shall not be deemed to be
representations or warranties of CSX or its Affiliates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE VECTURA PARTIES
Each of the Vectura Parties hereby represents and warrants to
ACL Holdings, and, in the case of Sections 4.1, 4.18, 4.19, 4.20, 4.21 and 4.22,
to CSX, as follows:
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Section 4.1. Incorporation; Authorization; Etc. (a) Each Vectura Party
is duly incorporated, validly existing and in good standing under the laws of
its jurisdiction of organization. Each Vectura Party Subsidiary is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, except as would not have a material adverse effect
on the Vectura Parties. Each Vectura Party and each Vectura Party Subsidiary (i)
has all requisite power to own its properties and assets and to carry on its
business as it is now being conducted and (ii) is in good standing and is duly
qualified to transact business in each domestic and foreign jurisdiction in
which the nature of property owned or leased by it or the conduct of its
business requires it to be so qualified, except where the failure to be in good
standing or to be duly qualified to transact business would not, individually or
in the aggregate, have a material adverse effect on the Vectura Parties.
Attached to Schedule 4.1 is a true and complete list of all Vectura Party
Subsidiaries as of the date hereof (noting the ownership of each Vectura Party
and each Vectura Party Subsidiary, noting which of such Subsidiaries will not be
Subsidiaries of ACL Holdings following the Closing Date, noting the jurisdiction
of organization of each Vectura Party and each Vectura Party Subsidiary and
noting all domestic and foreign jurisdictions in which any Vectura Party and
each Vectura Party Subsidiary is qualified to transact business).
(b) Each Vectura Party has full power to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement and the performance of each Vectura Party's obligations
hereunder have been duly and validly authorized by all necessary proceedings on
the part of such Vectura Party and no other proceedings or actions on the part
of such Vectura Party, its Board of Directors or stockholders are necessary
therefor. The execution, delivery and performance by each Vectura Party of this
Agreement will not (i) violate any provision of such Vectura Party's Certificate
of Incorporation or By-laws or other organizational documents, (ii) except as
disclosed in Schedule 4.1, violate any provision of, or be an event that is (or
with notice or the passage of time or both will result in) a violation of, or
result in the acceleration of or entitle any party to accelerate (whether after
the giving of notice or lapse of time or both) any obligation under, or result
in the imposition of any lien, pledge or encumbrance upon or the creation of a
security interest in the assets or properties of any Vectura Party or its
Subsidiaries pursuant to, any mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment, injunction, decree, permit or Vectura
"employee benefit plan" (as defined in Section 3(3) of ERISA) to which any
Vectura Party or its Subsidiary is a party or by which any Vectura Party or its
Subsidiary is bound and (iii) except as disclosed in Schedule 4.8, violate or
conflict with any statute, rule or regulation applicable to any Vectura Party or
its Subsidiary or any of its properties or assets or any other material
restriction of any kind or character to which any Vectura Party or its
Subsidiary is subject, that, in the case of clauses (ii) and (iii), would,
individually or in the aggregate, have a material adverse effect on the Vectura
Parties or would prevent the consummation of the Recapitalization Transactions.
This Agreement has been duly executed and delivered by each Vectura Party and,
assuming the due execution and delivery hereof by CSX, constitutes the legal,
valid and binding obligation of each Vectura Party, enforceable
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against each Vectura Party in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether in equity or at law).
Section 4.2. Capitalization. Schedule 4.2 lists the number of
authorized and outstanding shares of capital stock of each Vectura Party and
each Vectura Party Subsidiary. Except as set forth in Schedule 4.2, no stock
appreciation right, phantom stock or similar right is outstanding with respect
to any capital stock of any Vectura Party or any Vectura Party Subsidiary.
Except as set forth in Schedule 4.2, all outstanding shares of capital stock of
each Vectura Party and each Vectura Party Subsidiary are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights and
owned by a Vectura Party or its Subsidiary, free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on voting rights, charges and other legal encumbrances. Except as
set forth in Schedule 4.2 and except for this Agreement, there are no options,
warrants, calls, rights or agreements to which any Vectura Party or any of its
Subsidiaries is a party or by which any of them is bound obligating any Vectura
Party or any of its Subsidiaries to issue, deliver, sell, purchase, redeem or
acquire, or cause to be issued, delivered, sold, purchased, redeemed or
acquired, additional shares of capital stock or other equity interests of any
Vectura Party or its Subsidiary, or securities convertible into or exchangeable
for such shares or obligating any Vectura Party or its Subsidiary to grant,
extend or enter into any such option, warrant, call, right or agreement. Except
as set forth in Schedule 4.2, there are no outstanding contractual obligations
of any Vectura Party or its Subsidiary (i) restricting the transfer of, (ii)
affecting the voting rights of, (iii) requiring the repurchase, redemption or
disposition of, (iv) requiring the registration for sale of or (v) granting any
preemptive or antidilutive right with respect to any shares of capital stock of
any Vectura Party or its Subsidiary.
Section 4.3. Financial Statements. (a) Attached to Schedule 4.3 are
true and complete copies of (i) the audited consolidated statements of financial
position of each Vectura Party and its respective Subsidiaries, as of December
31, 1996, December 31, 1995, December 31, 1994, and the related audited
consolidated statements of earnings and retained earnings and cash flows for the
fiscal years ended December 31, 1996, December 31, 1995 and December 31, 1994,
together with the respective reports thereon and certifications thereof by
Xxxxxx Xxxxxxxx & Co. and (ii) the unaudited consolidated statement of financial
position of each Vectura Party and its respective Subsidiaries, as of December
31, 1997 of the related unaudited consolidated statement of earnings for the
12-month period then ended (collectively, the "Vectura Financial Statements").
Each consolidated statement of financial position included in the Vectura
Financial Statements may be hereinafter referred to as a "Vectura Balance
Sheet," and each consolidated statement of earnings and retained earnings and
each consolidated statement of earnings included in the Vectura Financial
Statements may be hereinafter referred to as a "Vectura Income Statement." The
Vectura Financial
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Statements have been prepared from and are consistent with the books and records
of the Vectura Parties and their Subsidiaries.
(b) Attached to Schedule 4.3 is a pro forma consolidated statement of
financial position and related pro forma consolidated statements of earnings and
retained earnings and cash flows of Vectura and its respective Subsidiaries
(collectively, the "NMI Pro Forma Financial Statements"), as of, and for the
fiscal year ended, December 31, 1997, giving effect to the exclusion of the
Vectura Excluded Assets and Vectura Excluded Liabilities, and the transactions
listed in the notes thereto. The balance sheet included in the NMI Pro Forma
Financial Statements (the "NMI Pro Forma Balance Sheet") sets forth any
deviations from GAAP used in the preparation thereof.
(c) Except as indicated in Schedule 4.3 or in the Vectura Financial
Statements (including any notes thereto), the Vectura Financial Statements were
prepared in accordance with GAAP and, in the case of any Vectura Balance Sheet,
fairly presents the consolidated financial position of each Vectura Party and
its respective Subsidiaries at the date thereof in all material respects and, in
the case of any Vectura Income Statement, fairly presents the consolidated
results of operations of the applicable Vectura Party and its respective
Subsidiaries for the periods then ended in all material respects (subject, in
the case of unaudited Vectura Financial Statements, to any other adjustments
described therein and normal year-end adjustments in accordance with GAAP which
would not, in the aggregate, have a material adverse effect with respect to the
Vectura Parties).
Section 4.4. Undisclosed Liabilities. Except as reflected, reserved
against or otherwise disclosed in the Vectura Balance Sheets as of December 31,
1997 (and specifically identified and described in the accompanying notes), and
except as set forth in Schedule 4.4, there are no liabilities, debts (including
obligations in respect of capital leases), or obligations of or claims against
any Vectura Party or its Subsidiary (other than those incurred in the ordinary
course consistent with past practice) which would, individually or in the
aggregate, have a material adverse effect on the Vectura Parties and that would
have been required to be reflected on such balance sheet or otherwise
specifically identified and described in the notes thereto in accordance with
GAAP.
Section 4.5. Properties. (a) Schedule 4.5 lists all real property and
interests in real property owned by any Vectura Party or any of its Subsidiaries
which is material to any Vectura Party (the "Vectura Owned Real Property") or
leased by any Vectura Party or any of its Subsidiaries as lessee or lessor which
is material to any Vectura Party (the "Vectura Leased Real Property"), such
description including, (i) for each Vectura Owned Real Property, the location
thereof, the approximate acreage thereof (where available) and the manner in
which such real property is used and (ii) for each Vectura Leased Real Property,
an identification of the lease agreement therefor (material amendments,
modifications, side letters and other agreements relating to any
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such lease agreement have been made available to CSX), the annual payment
obligation thereon and the location and approximate size (or other relevant
dimension) of the premises leased thereunder. Except as set forth on Schedule
4.5 and except for Vectura Permitted Encumbrances, the applicable Vectura Party
or its Subsidiary has good and valid fee title to each Vectura Owned Real
Property free and clear of all Encumbrances. All leases with respect to Vectura
Leased Real Property ("Vectura Leases") are in effect and, where a Vectura Party
or its Subsidiary is lessee, create a valid and binding interest in Vectura
Leased Real Property in favor of the applicable Vectura Party or its Subsidiary
and, except as set forth in Schedule 4.5, there are no material defaults by the
lessor or lessee thereunder continuing in existence beyond any applicable notice
and cure periods, nor, to the knowledge of any Vectura Party, do there exist any
circumstances which, with the giving of notice, the passage of time or both,
would become such a default. Other than a Vectura Party or its Subsidiaries and
third party lessees, to the knowledge of any Vectura Party, there are no parties
in possession or parties having any current or future right to occupy any
Vectura Owned Real Property or Vectura Leased Real Property, except as would not
have a material adverse effect with respect to the Vectura Parties. Except as
set forth in Schedule 4.5, there are no condemnation proceedings, special
assessments, impact fees or similar charges pending or, to the knowledge of any
Vectura Party, threatened in connection with Vectura Owned Real Property or, to
the knowledge of any Vectura Party, Vectura Leased Real Property, and no Vectura
Party has received or been served with any notice with respect to any of the
foregoing. The current use by each Vectura Party and its Subsidiaries of Vectura
Owned Real Property and Vectura Leased Real Property complies in all material
respects with all applicable zoning laws and building and use restrictions
(including all agreements of any Vectura Party or its Subsidiaries applicable
thereto), except as would not, individually or in the aggregate, have a material
adverse effect on the Vectura Parties.
(b) Except as set forth in Schedule 4.5, each Vectura Owned Real
Property is in compliance with all material terms of the instruments which
constitute Vectura Permitted Encumbrances, and none of the Vectura Permitted
Encumbrances materially interferes with the use or operation of Vectura Owned
Real Property in the manner in which such property is currently used or
operated, and there is not and has not been any uncured violation of the terms
of any Vectura Permitted Encumbrance which would result in a forfeiture or
otherwise adversely affect the property, in any such case, except where the
failure to so comply or such interference and adverse effect would not, together
with all other such failures, interferences and adverse effects, have a material
adverse effect on the Vectura Parties.
Section 4.6. Absence of Certain Changes. Except as otherwise set forth
in this Agreement, the Vectura Financial Statements or Schedule 4.6, from
December 31, 1997 through the date hereof, there has been no material adverse
change in, and there has not been any occurrence which, when taken together with
all other such changes or occurrences, would have a material adverse effect on
the Vectura Parties. Except as otherwise set forth in this Agreement, the
Vectura Financial
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Statements or Schedule 4.6, from December 31, 1997 through the date hereof, no
Vectura Party has taken any action which would have required the consent of CSX
under Section 5.4(b) hereof were such Section binding with respect to such
Vectura Party as of such time.
Section 4.7. Litigation; Orders. Except as disclosed in Schedule 4.7,
there are no lawsuits, actions, administrative or arbitration or other
proceedings or Government Authority investigations, pending with respect to
which any Vectura Party or its Subsidiary has been duly served or otherwise
received notice as of the date hereof or, to the knowledge of any Vectura Party,
threatened against any Vectura Party or its Subsidiaries by any person or
Government Authority (collectively, "Vectura Litigation") that would,
individually or in the aggregate, have a material adverse effect on the Vectura
Parties or would prevent the consummation of the Recapitalization Transactions.
Except as disclosed in Schedule 4.7, there are no judgments or orders,
injunctions, decrees, stipulations, settlements or awards (whether rendered by a
court or administrative agency, or by arbitration) outstanding against any
Vectura Party or its Subsidiary or affecting any of the properties of any
Vectura Party or its Subsidiary that would, individually or in the aggregate,
have a material adverse effect on the Vectura Parties or would prevent the
consummation of the Recapitalization Transactions. Except for those matters
disclosed in Schedule 4.7, the aggregate amount of all claims and judgments
pending with respect to which the Vectura Parties have been duly served or
otherwise received notice as of the date hereof or, to the knowledge of any
Vectura Party, threatened against any Vectura Party or its Subsidiary would not
have, either individually or in the aggregate, a material adverse effect on the
Vectura Parties.
Section 4.8. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc. (a) Schedule 4.8 includes all material licenses, permits,
franchises and other authorizations of any Government Authority possessed by or
granted to any Vectura Party or its Subsidiary or used in or necessary for the
operation of its business (the "Vectura Licenses"). Except as disclosed in
Schedule 4.8, all Vectura Licenses are in full force and effect except for those
whose failure to be in full force and effect would not, individually or in the
aggregate, have a material adverse effect on the Vectura Parties. Each Vectura
Party or its Subsidiary, as the case may be, is in compliance with the terms of
the Vectura Licenses, except where the failure to be in compliance would not,
individually or in the aggregate, have a material adverse effect on the Vectura
Parties. Except as disclosed in Schedule 4.8, no investigation, review or
proceeding is pending with respect to which any Vectura Party has been duly
served or otherwise received notice as of the date hereof or, to the knowledge
of any Vectura Party, threatened seeking the revocation or limitation of any
such Vectura License that, individually or in the aggregate, would have a
material adverse effect on the Vectura Parties.
(b) Schedule 4.8 lists all registrations, filings, applications,
notices, consents, approvals, orders, qualifications and waivers required to be
made, filed, given or obtained by any Vectura Party or its Subsidiary with, to
or from any person
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(including any Government Authority) in connection with the Recapitalization
Transactions except with respect to the HSR Act and except for those the failure
to make, file, give or obtain which would not, individually or in the aggregate,
have a material adverse effect on the Vectura Parties or prevent consummation of
the Recapitalization Transactions.
Section 4.9. Labor Matters. Except as described in Schedule 4.12(b), no
Vectura Party or its Subsidiary has any written contract of employment with any
employee. Except as described in Schedule 4.9, no Vectura Party or its
Subsidiary is presently a party to any collective bargaining agreement, subject
to a legal duty to bargain with any labor organization on behalf of employees or
the object of any attempt to organize employees for collective bargaining or
similar purposes or presently operating under an expired collective bargaining
agreement. Except as described in Schedule 4.9, no Vectura Party or its
Subsidiary is a party to or subject to any pending strike or pending work
stoppage, organizing attempt, union certification, picketing, boycott or similar
activity. Each Vectura Party and its Subsidiaries have complied in all material
respects with all applicable federal, state and local laws, ordinances, rules
and regulations and requirements relating to the employment, payment and
termination of labor, including the provisions thereof relative to wages, hours,
severance, layoffs, vacation, collective bargaining, employee benefits, and
employee benefit plans, contributions, unemployment, withholding taxes and
occupational health and safety and equal opportunity and non-discrimination laws
(including the Americans with Disabilities Act), except as would not have a
material adverse effect on the Vectura Parties. Each Vectura Party and its
Subsidiaries have made all deductions required by law to be made for employees'
wages and salaries and either remitted the same to appropriate Government
Authorities or provided for the same in its accounts and is not liable for any
arrears of wages or any taxes or penalties for failure to comply with the
payment or repayment of any of the foregoing, except as would not have a
material adverse effect on the Vectura Parties.
Section 4.10. Compliance with Laws. Except as may be indicated in
Schedule 4.10, the conduct of business by each Vectura Party and its
Subsidiaries complies with all statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees of any Government Authority applicable thereto,
except for violations or failures so to comply, if any, that, individually or in
the aggregate, would not have a material adverse effect on the Vectura Parties.
Section 4.11. Insurance. Schedule 4.11 sets forth a true and complete
list of all insurance policies currently held by any Vectura Party and its
Subsidiaries and in force as of the date hereof with respect to the assets,
properties, business, employees, officers and directors of any Vectura Party or
its Subsidiaries, setting forth as to each policy a general description of type
of coverage, carrier, policy number, coverage limit, expiration date, annual
premiums, and deductibles. Such policies are in full force and effect as of the
date hereof, except where the failure of such policies to be in full force and
effect would not have a material adverse effect on the Vectura Parties;
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and, except as set forth in Schedule 4.11, such policies will remain in effect
following the Closing or be replaced by at least substantially comparable
policies, except where the failure of such policies to so remain or be so
replaced would not have a material adverse effect on the Vectura Parties. The
holders of those policies listed on Schedule 4.11 are in compliance with the
terms and conditions thereof in all material respects. As of the date hereof,
all premiums covering all periods up to and including the date hereof have been
paid when due except where the failure to pay such premiums when due would not
have a material adverse effect on the Vectura Parties.
Section 4.12. Material Contracts. (a) Except as disclosed in Schedule
4.12(a), no Vectura Party nor its Subsidiary is as of the date hereof a party to
any (i) consulting agreement having a remaining term of at least one year and
requiring payments of base salary in excess of $100,000 per year or aggregate
payments of base salary in excess of $150,000, (ii) material sales
representative or agency contract which is not terminable on 12 months' (or
less) notice, (iii) material lease of real or personal property with an annual
base rental obligation of more than $250,000, or a total remaining rental
obligation of more than $1,000,000, (iv) joint venture or partnership agreement,
(v) agreement materially limiting in any way any Vectura Party's or its
Subsidiary's ability to compete with any person in any geographic location or
any line of business, (vi) agreement with any Affiliate (other than any
agreement between Affiliates which will be Subsidiaries of NMI Holdings
following the Closing), officer or director of any Vectura Party or its
Subsidiary or (vii) other material contract, agreement or arrangement (including
collective bargaining agreements) (other than any barge charter or barge lease
(whether as lessor or lessee) entered into in the ordinary course of business)
requiring future payment or payments in excess of $1,000,000 per year. Schedule
4.12(a) lists all notes, mortgages, indentures and other obligations and
agreements and other instruments for or relating to any lending or borrowing
(including assumed debt, guarantees, capitalized lease obligations and other
agreement creating a security interest in assets or properties of any Vectura
Party or its Subsidiary) of $1,000,000 or more effected by any Vectura Party or
its Subsidiary or to which any assets of any Vectura Party or its Subsidiary are
subject (except with respect to any such lending or borrowing among Vectura
Parties and their Subsidiaries, other than foreign Subsidiaries) (collectively,
"Vectura Indebtedness"). With respect to all contracts listed on Schedule 4.9,
Schedule 4.12(a) or Schedule 4.12(b), except as disclosed on Schedule 4.9,
Schedule 4.12(a) or Schedule 4.12(b), except as would not have a material
adverse effect on the Vectura Parties: (i) assuming that such contracts are
valid and binding on the other parties thereto, such contracts are valid and
binding on the applicable Vectura Party or its Subsidiary; (ii) no Vectura Party
has received notice to the effect that such contracts are not valid and binding
on the other parties thereto; and (iii) no Vectura Party or its Subsidiary, as
applicable, is in material breach thereof or material default thereunder, and
there does not exist under any provision thereof any event that, with the giving
of notice or the lapse of time or both, would constitute such a breach or
default.
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(b) Schedule 4.12(b) sets forth (i) a list of all employment agreements
to which any Vectura Party or its Subsidiary is a party having a remaining term
of at least one year and requiring payments of base salary in excess of $100,000
per year or aggregate payments of base salary in excess of $150,000 and (ii) the
number of severance and retention agreements with employees of any Vectura Party
or its Subsidiary to which any Vectura Party or its Subsidiary is a party and
the approximate aggregate maximum amount of the payments which would be required
to be made thereunder. True and complete copies of all such employment and
severance and retention agreements have been made available to CSX.
Section 4.13. Fixed Assets. Schedule 4.13 lists (i) all fixed assets of
any Vectura Party and its Subsidiaries having a book value as of December 31,
1997 of $1,000,000 or more and (ii) all towboats and barges owned or leased by
any Vectura Party or its Subsidiary and used in any Vectura Party's business as
of the date hereof, together with the name, dimensions and year of construction
of each such towboat and the number, dimensions, general type and year of
construction of each such barge (collectively, "Vectura Fixed Assets"). The
applicable Vectura Party or its Subsidiary has good and marketable title to, or,
in the case of leased or subleased Vectura Fixed Assets, valid and subsisting
leasehold interests in, all Vectura Fixed Assets, free and clear of all
Encumbrances other than Vectura Permitted Encumbrances, except as would not have
a material adverse effect on the Vectura Parties. The NMI Pro Forma Balance
Sheet reflects all material assets necessary and sufficient for the conduct of
the business of the Vectura Parties and their Subsidiaries as conducted by the
Vectura Parties and their Subsidiaries as of the date hereof (other than leased
assets).
Section 4.14. Environmental Matters. (a) It is the intention of the
Parties that the Vectura Parties are making no representation or warranty with
respect to environmental matters except as set forth in this Section 4.14 and
that any and all environmental matters shall be deemed an exception to each
other representation and warranty of the Vectura Parties contained in this
Agreement.
(b) Except as disclosed in Schedule 4.14, to the knowledge of the
Vectura Parties, (i) each Vectura Party and its Subsidiaries have complied and
currently comply with applicable Environmental Laws, except for failures to
comply that, individually or in the aggregate, would not have a material adverse
effect on the Vectura Parties; (ii) each Vectura Party and its Subsidiaries have
obtained all environmental consents, approvals, licenses and permits required
for its current operations by any applicable Environmental Laws, except for
failures to obtain that, individually or in the aggregate, would not have a
material adverse effect on the Vectura Parties; (iii) no Vectura Party nor any
of its Subsidiaries has received any written notice, claim or report alleging
any material liabilities or potentially material liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including any investigatory,
remedial, or corrective obligations arising under Environmental Laws and for
which the alleged liability or potential liability has not been fully resolved;
(iv) none of the following is present at any of the properties which will be
owned or leased by any Vectura Party or its Subsidiaries
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at the time of transfer to ACL Holdings, except where such presence,
individually or in the aggregate, would not have a material adverse effect on
the Vectura Parties: (A) asbestos-containing material in any friable form or
condition, (B) polychlorinated biphenyls (PCBs), including any materials or
equipment contaminated with PCBs, (C) underground storage tanks, (D) surface
impoundments, or (E) nonpermitted landfills or other nonpermitted waste disposal
areas; and (v) no Vectura Party nor any of its Subsidiaries has treated, stored,
disposed of, arranged for the disposal of, transported, handled, or released any
Hazardous Material, or owned or operated any property or facility (and no such
property or facility is contaminated by any Hazardous Material) in a manner that
has given or would give rise to any liabilities or any investigative, corrective
or remedial obligations, pursuant to CERCLA or any other Environmental Law,
except for any such liabilities or obligations that, individually or in the
aggregate, would not have a material adverse effect on the Vectura Parties.
(c) To the knowledge of the Vectura Parties, the Vectura Parties have
has provided to CSX copies of all material or potentially material environmental
audits, assessments, analyses, and reports, and any other documents materially
bearing on environmental liabilities or obligations of any Vectura Party or its
Subsidiaries which are in the possession or under the reasonable control of any
Vectura Party or its Subsidiary.
Section 4.15. Affiliate Transactions. At the Closing Date, except for
the transactions listed in Schedule 4.15, no person that will be a Subsidiary of
ACL Holdings following the Closing shall be a party to any contract, agreement
or commitment with Vectura or any stockholder or Subsidiary (other than any
Transferred NMI Holdings Subsidiary) of Vectura or any person which, following
the Closing, will be a director, officer, employee, stockholder or Affiliate of
any such person, that are on terms and conditions in the aggregate materially
more burdensome to such Subsidiary than would be usual and customary in similar
contracts, agreements, commitments, transactions or business arrangements
negotiated on an arm's-length basis among unaffiliated parties.
Section 4.16. Intellectual Property. (a) Schedule 4.16 sets forth a
complete and correct list of all material: (i) patented or registered
Intellectual Property Rights and pending patent applications or other
applications for registrations of Intellectual Property Rights owned or filed by
or on behalf of any Vectura Party or its Subsidiary; (ii) computer software
owned and/or used by any Vectura Party or its Subsidiary (other than
mass-marketed software); and (iii) licenses or similar agreements or
arrangements for Intellectual Property Rights to which any Vectura Party or its
Subsidiary is a party, either as licensee or licensor (collectively, "Vectura
Intellectual Property Rights").
(b) Except as set forth on Schedule 4.16: (i) each Vectura Party or its
Subsidiary owns or possesses all Intellectual Property Rights material to the
operation of its business as conducted as of the date hereof free and clear of
material encumbrances, licenses and other restrictions; (ii) to the knowledge of
any Vectura
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Party, no claim by any third party contesting the validity, enforceability, use
or ownership of any Vectura Intellectual Property Rights owned or used by any
Vectura Party or its Subsidiary has been made, is currently outstanding or is
threatened; (iii) no Vectura Party nor its Subsidiary has received any notices
of any infringement or misappropriation by, or conflict with, any third party
with respect to the Vectura Intellectual Property Rights (including any demand
or request that any Vectura Party or its Subsidiary license any rights from a
third party); and (iv) no Vectura Party nor its Subsidiary has infringed,
misappropriated or otherwise conflicted with any Intellectual Property Rights of
any third parties, and no Vectura Party nor its Subsidiary is aware of any
infringement, misappropriation or conflict which will occur as a result of the
continued operation of any Vectura Party's business as conducted as of the date
hereof, except, in each of the foregoing (i) through (iv), as would not have a
material adverse effect on the Vectura Parties.
Section 4.17. Employee Benefit Plans. (a) Schedule 4.17(a) lists (i)
each "employee benefit plan" (as such term is defined in Section 3(3) of ERISA)
at any time contributed to, maintained or sponsored by any Vectura Party or any
of its Affiliates, or with respect to which any Vectura Party or any of its
Affiliates has any liability or potential liability; and (ii) each other
retirement, savings, deferred compensation, severance, stock, performance,
bonus, incentive, or other material employee benefit plan, policy, or
arrangement of any kind, contributed to, maintained or sponsored by any Vectura
Party or any of its Affiliates, or with respect to which any Vectura Party or
any of its Affiliates has any liability or potential liability; in each case for
the benefit of any current employees (whether active or on leave of absence) of
any Vectura Party or its Subsidiaries ("Vectura Current Employees") or former
employees of any Vectura Party or any of its Subsidiaries ("Vectura Former
Employees" and together with Vectura Current Employees, "Vectura Employees") or
their respective beneficiaries and dependents (collectively, "Vectura Employee
Benefit Plans"; provided that "Vectura Employee Benefit Plans" shall not include
routine administrative procedures, government-required programs or Vectura
Foreign Plans). Schedule 4.17(a) also specifies which Vectura Employee Benefit
Plans are maintained solely by one or more of the Vectura Parties or their
respective Subsidiaries or solely for the benefit of Vectura Employees and their
beneficiaries and dependents ("Vectura-Only Employee Benefit Plans").
(b) Except as set forth in Schedule 4.17(b), all Vectura Employee
Benefit Plans and any related trusts are in compliance in all material respects
with and have been administered in material compliance with the terms of such
plans and any applicable collective bargaining agreements, and all applicable
requirements of law and regulations, including but not limited to the Code and
ERISA, and all contributions and premium payments required to be made to or on
account of each such Vectura Employee Benefit Plan under the terms thereof,
ERISA or the Code for all periods of time prior to the date hereof and the
Closing Date have been or will be, as the case may be, made or properly accrued.
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(c) Except as set forth in Schedule 4.17(c), with respect to any
Vectura Employee Benefit Plan which is intended to qualify under Section 401(a)
of the Code other than a Multiemployer Plan, a favorable determination letter as
to qualification under Section 401(a) of the Code has been issued by the IRS and
the related trust has been determined to be exempt from taxation under Section
501(a) of the Code and no events or circumstances have occurred that could be
reasonably expected to materially adversely affect the qualified status of any
such plan or trust. Except as set forth in Schedule 4.17(c), no Vectura-Only
Employee Benefit Plan is subject to Title IV of ERISA or to Section 412 or 4971
of the Code. Except as set forth in Schedule 4.17(c), no Vectura Employee
Benefit Plan is a "Multiemployer Plan." Except as set forth in Schedule 4.17(c):
with respect to each Vectura-Only Employee Benefit Plan that is subject to
Section 412 of the Code or Title IV of ERISA, there has been no application for
or waiver of the minimum funding standards imposed by Section 412 of the Code
with respect to any Vectura-Only Employee Benefit Plan, and there are no facts
or circumstances that would materially change the funded status of any such
Vectura-Only Employee Benefit Plan in an adverse manner; no material asset of
any Vectura Party or its Subsidiaries to be acquired by ACL Holdings, directly
or indirectly, pursuant to this Agreement is subject to any material lien under
ERISA or the Code; and there are no pending or threatened actions, suits,
investigations or claims with respect to any Vectura Employee Benefit Plan
(other than routine claims for benefits) which could result in material
liability to ACL Holdings or any of its Affiliates after the Closing.
(d) Except as otherwise set forth in Schedule 4.17(d), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) materially increase any benefits
otherwise payable under any Vectura Employee Benefit Plan or (ii) result in the
acceleration of the time of payment or vesting of any such benefits to any
material extent.
(e) Each Vectura Party has delivered or made available to CSX a true,
correct and complete copy of all plan documents and the current summary plan
descriptions (if any) for each Vectura Employee Benefit Plan. In addition, with
respect to each Vectura Employee Benefit Plan, the Vectura Parties have
delivered or made available to CSX a true, correct and complete copy of: (i) the
most recent Annual Report (Form 5500 Series) and accompanying schedule, if any,
or any similar filing made with any foreign authority; (ii) the most recent
annual financial report, if any; (iii) the most recent actuarial report, if any;
and (iv) the most recent determination letter from the IRS or similar document
issued by any other taxing authority, if any.
(f) No event has occurred and, to the knowledge of the Vectura Parties,
no circumstances now exist that could be reasonably expected to result in, any
material liability under Title IV of ERISA or Section 412 of the Code with
respect to any employee benefit plan sponsored by Vectura or any of its
Affiliates that would be a liability of ACL Holdings or any of its Affiliates
following the Closing (other than the payment of contributions and premiums to
the Pension Benefit Guaranty Corporation that are not yet due).
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(g) Except as set forth in Schedule 4.17(g), no Vectura Party nor any
of its Subsidiaries contributes to, maintains or sponsors or has any liability
with respect to any employee benefit plan, agreement or arrangement applicable
to employees of any Vectura Party or any Subsidiary located outside the United
States (the "Vectura Foreign Plans"). Each Vectura Foreign Plan is in compliance
in all material respects with all laws applicable thereto and the respective
requirements of such Vectura Foreign Plan's governing documents. There are no
material actions, suits or claims (other than routine claims for benefits) with
respect to any Vectura Foreign Plan, and no circumstances exist which could
reasonably be expected to give rise to any such material actions, suits or
claims.
(h) Except as set forth in Schedule 4.17(h): (i) no Multiemployer Plan
in which any Vectura Party or any of their respective Subsidiaries has
participated within the past six years has been terminated; (ii) no proceeding
has been initiated to terminate any Multiemployer Plan that is a Vectura
Employee Benefit Plan (a "Vectura Multiemployer Plan") and there has been no
"reportable event" (within the meaning of Section 4043(c) of ERISA) with respect
to any Vectura Multiemployer Plan within the past six years; (iii) no Vectura
Multiemployer Plan is in reorganization as described in Section 4241 of ERISA
and no Vectura Multiemployer Plan is insolvent as described in Section 4245 of
ERISA; (iv) no Vectura Party nor any of its Subsidiaries has incurred any
liability on account of a "partial withdrawal" or a "complete withdrawal"
(within the meaning of Sections 4205 and 4203, respectively, of ERISA) from any
Multiemployer Plan that has not been satisfied in full, no such liability has
been asserted that has not been satisfied in full, and there do not now exist
any events or circumstances which could result in any such partial or complete
withdrawal; and (v) none of the Vectura Parties nor any of their respective
Subsidiaries is bound by any contract or agreement or has any obligation or
liability described in Section 4204 of ERISA.
(i) Except as set forth in Schedule 4.17(i): (i) each Vectura Party and
its Subsidiaries have complied with the health care continuation requirements of
Part 6 of Subtitle B of Title I of ERISA; and (ii) none of the Vectura Parties
nor any of their respective Subsidiaries has any obligation under any Vectura
Employee Benefit Plan or otherwise to provide medical, dental or life insurance
benefits to Vectura Former Employees or to any other person, except as
specifically required by Part 6 of Subtitle B of Title I of ERISA and except in
the amounts appropriately reflected on the appropriate Vectura Balance Sheet.
Section 4.18. Brokers, Finders, Etc. No Vectura Party nor its Affiliate
has employed any broker, finder, consultant or other intermediary in connection
with the Recapitalization Transactions who would have a valid claim for a fee or
commission from CSX, ACL Holdings or any Subsidiary of ACL Holdings in
connection with the Recapitalization Transactions.
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Section 4.19. Qualifications of Vectura Parties. Each Vectura Party is
a "Citizen of the United States" within the meaning of Section 2 of the Shipping
Act of 1916, as amended (42 U.S.C. 802), and is qualified to enter into this
Agreement and to acquire an ownership interest in marine vessels, and the
provisions of said Act imposing restrictions upon transfers to persons other
than Citizens of the United States and any proclamations, orders or regulations
thereunder are inapplicable to each Vectura Party and the transactions
contemplated hereby.
Section 4.20. Availability of Funds. The Vectura Parties have delivered
to CSX true and complete fully executed copies of the following letters received
in connection with the financing of the transactions contemplated hereby and the
payment of all related fees and expenses (the "Financing Letters"): (i) the
Commitment Letter, dated as of the date hereof, from Chase Securities Inc. and
The Chase Manhattan Bank to Vectura relating to two Senior Secured Term Loan
Facilities in an aggregate principal amount of $435 million and a Senior Secured
Revolving Facility in an amount equal to $100 million (the "Senior Credit
Letter"); (ii) (A) the Highly Confident Letter, dated as of the date hereof,
from Wasserstein, Perella & Co. to Vectura and (B) the Highly Confident Letter,
dated as of the date hereof, from Chase Securities Inc. to Vectura, each
relating to the issuance of Senior Unsecured Notes in an aggregate principal
amount of $200 million and Senior Unsecured Discount Notes resulting in gross
cash proceeds of $100 million (collectively, the "High Yield Letters"); and
(iii) the Commitment Letter, dated as of the date hereof, from 399 Venture
Partners Inc. to Vectura relating to $60 million of equity capital and the
Commitment Letter, dated as of the date hereof, from Vectura to ACL Holdings
relating to $60 million of equity capital (collectively, the "Equity Letters"),
in each case as in effect on the date of this Agreement, and will deliver to
CSX, promptly following receipt thereof, a true and complete copy of any
proposed modification or amendment to any Financing Letter. The cash proceeds of
the financing contemplated by the Financing Letters is in amounts sufficient to
consummate the transactions contemplated hereby and the payment of all related
fees and expenses. The terms and conditions of the Financing Letters are
satisfactory to the Vectura Parties, and none of such parties knows of any fact
or circumstance which could reasonably be expected to lead to the failure of the
conditions to such financing to be satisfied.
Section 4.21. No Outside Reliance. Notwithstanding anything contained
in this Article IV or any other provision hereof, it is the explicit intent of
each Party that the Vectura Parties are making no representation or warranty
whatsoever, express or implied, beyond those expressly given in this Agreement,
including any implied warranty or representation as to condition, seaworthiness,
merchantability, suitability or fitness for a particular purpose as to any
assets of NMI or its Subsidiaries. Without limiting the generality of the
foregoing, it is understood that any cost estimates, financial or other
projections or other predictions contained or referred to in the Schedules
hereto and any cost estimates, projections or predictions or any other
information contained or referred to in other materials or oral presentations
that have been or shall hereafter be provided to CSX or any of its Affiliates,
agents or
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representatives are not and shall not be deemed to be representations or
warranties of the Vectura Parties or their Affiliates.
Section 4.22. Acquisition for Investment. Each Vectura Party confirms
that it has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of the transactions
contemplated hereby, including any acquisition of securities hereunder. Each
Vectura Party confirms that CSX has made available to the Vectura Parties the
opportunity to ask questions of the officers and management employees of ACL and
its Subsidiaries as well as access to the documents, information and records of
ACL and its Subsidiaries and to acquire additional information about the
business and financial condition of ACL and its Subsidiaries, and each Vectura
Party confirms that it has made an independent investigation, analysis and
evaluation of ACL and its Subsidiaries and their properties, assets, business,
financial condition, documents, information and records. Each Vectura Party is
acquiring the securities to be acquired by it hereunder for investment and not
with a view toward or for sale in connection with any distribution thereof, or
with any present intention of distributing or selling such securities within the
meaning of the Securities Act of 1933, as amended. Each Vectura Party
understands and agrees that such securities may not be sold, transferred,
offered for sale, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act of 1933, as amended, except pursuant to an
exemption from such registration available under such Act, and without
compliance with state, local and foreign securities laws, in each case, to the
extent applicable.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.1. Investigation of Business; Access to Properties and
Records, Etc. (a) After the date hereof, each Party shall cause to be afforded
to the other Parties and their representatives (including accountants, legal
counsel and sources of financing) reasonable access to the offices, properties,
contracts, commitments, books and records of ACL and the Vectura Parties during
normal business hours, in order that each Party may have full opportunity to
make such investigations as it may reasonably require of the affairs of ACL and
the Vectura Parties, provided that such investigation shall only be upon
reasonable notice and shall not unreasonably disrupt personnel and operations
and shall be at the investigating Party's sole risk and expense. All requests
for access to the offices, properties, books, and records of ACL or the Vectura
Parties shall be made to such representatives of ACL and the Vectura Parties as
such persons shall designate, who shall be solely responsible for coordinating
all such requests and all access permitted hereunder, and provided further that
such access may be limited to the extent required by preexisting obligations of
any party. It is further agreed that, prior to the Closing Date, no Party nor
its representatives shall contact any of the employees, customers, suppliers,
joint venture partners or other associates or Affiliates of any other Party in
connection with the Recapitalization Transactions, whether in person or by
telephone, mail or other means of communication, without the specific prior
written
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authorization of such representatives of such other Party. All notices and
applications to, filings with, and other contacts with any Government Authority
relating to the Recapitalization Transactions shall be made by any Party only
after prior consultation with and approval by the other Parties, which approval
shall not be unreasonably withheld. If, as of the date hereof or at any time
hereafter, any Party is aware of or discovers any breach of any representation
or warranty contained in this Agreement or any circumstance or condition that
upon Closing would constitute such a breach, such Party covenants that it shall
promptly so inform the other Parties of such event in writing, provided that,
except as otherwise provided herein, no such disclosure shall be deemed to amend
or supplement any schedule or exhibit hereto or prevent or cure any
misrepresentation, breach of warranty or breach of covenant unless otherwise
agreed upon in writing by the recipient Party.
(b) Any information provided to any Party or its representatives
pursuant to this Agreement or in connection with the transactions contemplated
hereby, whether prior to or after the date of this Agreement, shall be held by
such Party and its representatives in accordance with and subject to the terms
of that certain letter agreement, dated October 2, 1997 by and between
Wasserstein, Perella & Co., Inc. on behalf of CSX and Citicorp Venture Capital,
Ltd. ("CVC") (the "Confidentiality Agreement"). The Confidentiality Agreement
shall continue in full force and effect until the Closing Date, at which time
the Confidentiality Agreement and the obligations of the Parties under this
Section 5.1(b) shall terminate.
(c) The Parties agree (i) that they shall be entitled to retain copies
of their respective books and records contributed to or held by ACL Holdings
pursuant to Section 2.1, (ii) to continue to hold (or cause ACL Holdings to
hold, as applicable) all of the books and records of ACL and the Vectura Parties
existing on the Closing Date and not to destroy or dispose of any thereof for a
period of 10 years from the Closing Date (or, in the case of any records,
schedules and workpapers relating to any Returns or Tax audits, until the
expiration of all applicable statutes of limitations) or such longer time as may
be required by law or such shorter period as the Parties may agree in writing,
(iii) thereafter, if it is proposed to destroy or dispose of any of such books
and records, that CSX or the Vectura Parties, if the destroying party, shall
offer first in writing at least 60 days prior to such proposed destruction or
disposition to surrender them to ACL Holdings, and ACL Holdings shall do the
same to CSX or the Vectura Parties (as applicable) if ACL Holdings is the
destroying party, and (iv) that, at any time and from time to time following the
Closing Date, ACL Holdings shall afford CSX, its Affiliates, representatives,
accountants and counsel and other advisors, during normal business hours, upon
reasonable request and notice, full access to such books, records and other data
(including the right to photocopy the same) and to appropriate employees to the
extent that such access may be requested for any legitimate purpose at no cost
to CSX (other than for reasonable out-of-pocket expenses), provided that such
access shall not unreasonably disrupt personnel and operations, and provided
further that nothing herein shall limit any Party's rights of discovery.
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Section 5.2. Efforts; Obtaining Consents; Antitrust Laws. (a) Subject to
the terms and conditions herein provided, each Party shall use its reasonable
efforts to take or cause to be taken all actions and to do or cause to be done
all things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated hereby, and to cooperate
fully with the other in connection with the foregoing, including using all
reasonable efforts (i) to obtain all necessary waivers, consents and approvals
from other parties to loan agreements, leases and other contracts with third
parties, (ii) to obtain all consents, approvals and authorizations that are
required to be obtained under any federal, state, local or foreign law or
regulation, (iii) to lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the Parties to consummate the
transactions contemplated hereby, (iv) to effect all necessary registrations and
filings including filings under the HSR Act and submissions of information
requested by any Government Authority and (v) to fulfill all conditions set
forth in Articles VIII and IX of this Agreement. Each Party further shall, with
respect to any threatened or pending preliminary or permanent injunction or
other order, decree or ruling or statute, rule, regulation or executive order
that would adversely affect the ability of the Parties to consummate the
transactions contemplated hereby, use all reasonable efforts to prevent the
entry, enactment or promulgation thereof, as the case may be.
(b) Each Party shall promptly inform the other of any communication from
the Federal Trade Commission, the United States Department of Justice or any
other Government Authority regarding any of the transactions contemplated
hereby. If either Party or any Affiliate thereof receives a request for
additional information or documentary material from any such Government
Authority with respect to the transactions contemplated hereby, then such Party
will endeavor in good faith to make or cause to be made, as soon as reasonably
practicable and after consultation with the other Party, an appropriate response
in compliance with such request. The Parties shall cooperate with respect to all
discussions and negotiations with any Government Authority.
(c) In furtherance of and without limiting the generality of the
foregoing, the Vectura Parties shall use their best efforts to arrange and
consummate the financing contemplated by the Financing Letters, including using
their best efforts (A) to negotiate in good faith definitive agreements
respecting such financing on reasonable terms with respect thereto, (B) to
satisfy all conditions applicable to any of such persons or their Affiliates in
such definitive agreements, (C) to negotiate in good faith such modifications to
such financing as may be necessary or advisable to reflect any change in market
conditions which occurs after the date of this Agreement, (D) if any portion of
the financing contemplated by the Financing Letters has become unavailable,
regardless of the reason therefor, to obtain alternative financing from other
sources on and subject to substantially the same terms and conditions as that
portion which has become unavailable and (E) to satisfy at or prior to the
Closing all requirements of any agreements relating to the Financing Letters
which are conditions to closing under such agreements or to the drawdown of
proceeds thereunder (it being
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understood that such best efforts apply to both High Yield Letters and not to
one versus the other so long as such High Yield Letters are in effect). The
Parties acknowledge that "best efforts" as used in the preceding or immediately
following sentences shall not require agreement to economic terms (including
fees, expenses, interest rates, amortization schedules and issuance of equity
securities) that are, in the aggregate, materially more burdensome than those
contemplated by the Financing Letters. The Vectura Parties agree that they will
use their best efforts to exercise all of their rights to enforce performance of
the Financing Letters and will not waive, modify or amend any of their rights
under such letters in any material respect. CSX shall, and shall cause ACL
Holdings and its Subsidiaries to, cooperate with the efforts of the Vectura
Parties in respect of the foregoing, including providing such assistance as may
reasonably be requested in connection with the preparation of any prospectus,
offering memorandum or registration statement (including providing any pro forma
financial statements of ACL Holdings required in connection therewith), provided
that the foregoing shall not require CSX or its Affiliate to incur or assume any
financial obligation or incur any liability in connection with any prospectus,
offering memorandum or registration statement. CSX acknowledges that the Vectura
Parties shall be entitled to cause an information memorandum reasonably
acceptable to CSX to be prepared and used in connection with the consummation of
the financing of the transactions contemplated hereby pursuant to the Financing
Letters and agrees to use its best efforts (as provided in Sections 5.1 and
5.2(a)) to furnish the Vectura Parties access to, and to cause the cooperation
of, all personnel necessary for the Vectura Parties to consummate such
financing. In addition, CSX shall request its accountants, at the request and
expense of the Vectura Parties, to consent to the inclusion of their report or
reports in, and to issue a comfort letter on customary terms in connection with,
any information memoranda or filings required by such financing.
Section 5.3. Further Assurances. In addition to the other agreements set
forth herein, each Party shall, from time to time, whether before, at or after
the Closing Date, and shall cause its Affiliates to, execute and deliver such
further instruments of conveyance and transfer and to use commercially
reasonable efforts to take such other action as may be necessary to carry out
the purposes and intents hereof.
Section 5.4. Conduct of Business. (a) From the date hereof to the
Closing, except as set forth in Schedule 5.4(a) or as contemplated by ACL's 1998
Business Operating Plan and Budget or ACL's 1998 Capital Plan (true and complete
copies of which have been attached to Schedule 5.4(a)) or as otherwise
contemplated by this Agreement or as consented to or approved in writing by the
Vectura Parties (which consent or approval shall not be unreasonably withheld or
delayed), CSX agrees that (it being understood that, for purposes of the
following, Subsidiaries shall include only Subsidiaries of ACL Holdings which
will be Subsidiaries of ACL Holdings following the Closing):
(i) ACL and its Subsidiaries shall operate their respective
businesses in the ordinary course consistent with past practice and
shall use reasonable
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efforts to preserve their respective businesses intact, to
keep available the services of employees and to preserve the
goodwill of customers and others having business relations
with them;
(ii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not (A) create, incur or assume any
long-term or short-term debt (including obligations in respect
of capital leases) in excess of $3,000,000 per transaction or
$15,000,000 for all such transactions, except loans and
advances among ACL and its Subsidiaries, (B) assume,
guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for any
obligations of any person other than ACL and its Subsidiaries
in excess of $3,000,000 per transaction or $15,000,000 for all
such transactions, (C) declare, set aside, or pay any dividend
or make any distribution with respect to its capital stock
(other than in cash, cash equivalents or other form comprising
Working Capital) or redeem, purchase, or otherwise acquire any
of its capital stock or (D) make any loans, advances or
capital contributions to or investments in any person other
than its Subsidiaries (except for customary loans or advances
to employees) in excess of $3,000,000 per transaction or
$15,000,000 for all such transactions;
(iii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not (A) increase in any manner the
base compensation of, or enter into any new bonus or incentive
agreement or arrangement with, any of its directors, officers
or other key employees, (B) pay or agree to pay any material
pension, retirement allowance or similar employee benefit to
any such director, officer or key employee, whether past or
present not required or contemplated to be paid prior to the
Closing Date by any existing ACL Employee Benefit Plan as in
effect on the date hereof, (C) enter into or materially amend
(provided that any such amendment shall be subject to clause
(A) above) any new or existing employment, severance,
consulting, or other compensation agreement with any existing
director, officer or key employee or (D) commit to any
additional material pension, profit-sharing, deferred
compensation, group insurance, severance pay, retirement or
other employee benefit plan, fund or similar arrangement or
amend or commit itself to amend any of such plans, funds or
similar arrangements;
(iv) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not (A) sell, transfer or otherwise
dispose of any assets with a fair market value in excess of
$3,000,000 per transaction or $15,000,000 for all such
transactions (other than floating vessels in connection with
the
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retirement thereof, swap transactions or other dispositions
not exceeding $15,000,000 in the aggregate), (B) create any
new material security interest, lien or encumbrance on
properties or assets or (C) enter into any material joint
venture or partnership;
(v) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not enter into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) providing for future payments
by ACL of more than $3,000,000 per agreement or $15,000,000
for all such agreements;
(vi) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not make any capital expenditure
(or series of related capital expenditures) either involving
more than $3,000,000 per transaction or $15,000,000 for all
such transactions;
(vii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not make any capital investment in,
any loan to, or any acquisition of the securities or assets
of, any other person (or series of related capital
investments, loans and acquisitions) either involving more
than $1,000,000 per transaction or $10,000,000 for all such
transactions;
(viii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not cancel, compromise, waive, or
release any right or claim (or series of related rights or
claims), except in respect of Taxes through audit proceedings
not exceeding $10,000,000 in the aggregate, involving more
than $3,000,000 per claim or $15,000,000 for all such claims;
(ix) ACL shall not make or authorize any change in its
organizational documents;
(x) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, ACL
and its Subsidiaries shall not make any loan to, or enter into
any other transaction with, any of its directors, officers,
and employees;
(xi) except as required by law or GAAP, ACL and its Subsidiaries
shall not change any of its Accounting Principles; and
(xii) ACL and its Subsidiaries shall not agree to take any action
prohibited by this Section.
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(b) From the date hereof to the Closing, except as set forth in Schedule
5.4(b) or as contemplated by the Vectura Parties' 1998 Capital Expenditures Plan
(a true and complete copy of which has been attached to Schedule 5.4(b)) or as
otherwise contemplated by this Agreement or as consented to or approved in
writing by CSX (which consent or approval shall not be unreasonably withheld or
delayed), the Vectura Parties agree that (it being understood that, for purposes
of the following, Subsidiaries shall include only Transferred NMI Holdings
Subsidiaries):
(i) The Vectura Parties and their Subsidiaries shall operate their
respective businesses in the ordinary course consistent with
past practice and shall use reasonable efforts to preserve
their respective businesses intact, to keep available the
services of employees and to preserve the goodwill of
customers and others having business relations with them;
(ii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not (A) create,
incur or assume any long-term or short-term debt (including
obligations in respect of capital leases) in excess of
$1,000,000 per transaction or $3,000,000 for all such
transactions, except loans and advances among parties which
will be Subsidiaries of ACL Holdings following the Closing,
(B) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for
any obligations of any person other than parties which will be
Subsidiaries of ACL Holdings following the Closing in excess
of $1,000,000 per transaction or $3,000,000 for all such
transactions, (C) declare, set aside, or pay any dividend or
make any distribution with respect to its capital stock (other
than in cash, cash equivalents or other form comprising
Working Capital) or redeem, purchase, or otherwise acquire any
of its capital stock, or (D) make any loans, advances or
capital contributions to or investments in any person other
than its Subsidiaries (except for customary loans or advances
to employees) in excess of $1,000,000 per transaction or
$3,000,000 for all such transactions;
(iii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not (A) increase
in any manner the base compensation of, or enter into any new
bonus or incentive agreement or arrangement with, any of its
directors, officers or other key employees, (B) pay or agree
to pay any material pension, retirement allowance or similar
employee benefit to any such director, officer or key
employee, whether past or present not required or contemplated
to be paid prior to the Closing Date by any existing Vectura
Employee Benefit Plan as in effect on the date hereof, (C)
enter into or materially amend (provided that any such
amendment shall be subject to clause (A) above) any new
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or existing employment, severance, consulting, or other
compensation agreement with any existing director, officer or
key employee or (D) commit to any additional material pension,
profit-sharing, deferred compensation, group insurance,
severance pay, retirement or other employee benefit plan, fund
or similar arrangement or amend or commit itself to amend any
of such plans, funds or similar arrangements;
(iv) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not (A) sell,
transfer or otherwise dispose of any assets with a fair market
value in excess of $500,000 per transaction or $2,000,000 for
all such transactions (other than floating vessels in
connection with the retirement thereof, swap transactions or
other dispositions not exceeding $3,000,000 in the aggregate),
(B) create any new material security interest, lien or
encumbrance on properties or assets or (C) enter into any
material joint venture or partnership;
(v) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not enter into
any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) providing
for future payments by the Vectura Parties of more than
$1,000,000 per agreement or $3,000,000 for all such
agreements;
(vi) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not make any
capital expenditure (or series of related capital
expenditures) either involving more than $500,000 per
transaction or $2,000,000 for all such transactions;
(vii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not make any
capital investment in, any loan to, or any acquisition of the
securities or assets of, any other person (or series of
related capital investments, loans and acquisitions) either
involving more than $650,000 per transaction or $2,000,000 for
all such transactions;
(viii) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not cancel,
compromise, waive, or release any right or claim (or series of
related rights or claims), except in respect of Taxes through
audit proceedings not exceeding $2,000,000 in the aggregate,
involving more than $500,000 per claim or $2,000,000 for all
such claims;
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(ix) the Vectura Parties and their Subsidiaries shall not make or
authorize any change in its charter or bylaws which would
materially adversely affect the ability of the Vectura Parties
to consummate the Recapitalization Transactions;
(x) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations, the
Vectura Parties and their Subsidiaries shall not make any loan
to, or enter into any other transaction with, any of its
directors, officers, and employees;
(xi) except as required by law or GAAP, the Vectura Parties and
their Subsidiaries shall not change any of its Accounting
Principles; and
(xii) the Vectura Parties and their Subsidiaries shall not agree to
take any action prohibited by this Section.
Section 5.5. Pro Forma Transactions. Notwithstanding anything to the
contrary contained in this Article or any other provision hereof, it is the
explicit intent of the Parties, and the Parties hereby acknowledge and consent,
that the ACL Pro Forma Transactions shall be consummated by CSX and ACL at or
prior to the Closing.
Section 5.6. Interim Financial Statements. Within 30 days after the end
of each calendar month following the date hereof, CSX shall deliver to the
Vectura Parties, and the Vectura Parties shall deliver to CSX, financial
statements for ACL or the Vectura Parties, respectively, of the type customarily
generated by ACL and delivered to CSX or by the Vectura Parties, respectively,
and prepared on a basis consistent with the adjustments set forth in the ACL Pro
Forma Financial Statements and the NMI Pro Forma Financial Statements,
respectively.
Section 5.7. Public Announcements; Non-Public Information. (a) Subject
to applicable securities laws and stock exchange requirements, from the date
hereof until the Closing Date, each Party shall consult with the other Party
before issuing, or permitting any agent or Affiliate to issue, any press
releases or otherwise making or permitting any agent or Affiliate to make, any
public statements with respect to this Agreement and the transactions
contemplated hereby. The Parties acknowledge that the provisions of this Section
shall not apply to any registration statement, prospectus, offering circular,
offering memorandum or similar document prepared in connection with the
financings contemplated by the Financing Letters, provided that such documents
are reasonably acceptable to CSX.
(b) From the date hereof until the earlier to occur of (x) the
termination of this Agreement pursuant to the terms and conditions hereof and
(y) the Closing, CSX shall not, and shall instruct its Subsidiaries,
representatives, directors, officers, agents and controlled Affiliates not to,
and the Vectura Parties shall not, and shall instruct their Subsidiaries,
representatives, directors, officers, agents, stockholders and controlled
Affiliates not to, initiate, solicit, negotiate, accept or discuss any
Acquisition
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Proposal; provided that this Agreement shall not prevent any such action by or
on behalf of CSX at any time following written advice to CSX by its financial
advisors (which advice is provided to the Vectura Parties) that there is a
significant likelihood that the conditions set forth in Article VIII will not be
satisfied.
Section 5.8. Intercompany Items. Immediately prior to Closing, to the
extent permitted by law, except for normal commercial transportation
arrangements consistent with past practice and for accounts payable for accrued
federal taxes (to the extent included in the calculation of Working Capital) for
periods prior to the Closing, for the transition services agreement contemplated
by Section 8.8 and the lease contemplated by Section 3.15, (i) ACL Holdings and
each Subsidiary of ACL Holdings shall dividend and distribute to CSX any and all
claims (including inchoate claims) which any such party may have against CSX,
its Affiliates or CSX's or such Affiliates' officers, directors or employees (or
shall otherwise forgive and terminate such claims), and such claims shall be
owned by CSX as of the Closing, and (ii) all intercompany accounts between (x)
CSX and any of its Affiliates, on the one hand, and ACL Holdings or any
Subsidiary of ACL Holdings which will be a Subsidiary of ACL Holdings following
the Closing, on the other hand, or (y) any Vectura Party and any of its
Affiliates, on the one hand, and NMI Holdings and any Vectura Party Subsidiary
which will be a Subsidiary of ACL Holdings following the Closing, on the other
hand (not to include any investments and related transactions of CVC and 399
Venture Partners Inc. with Vectura), shall be canceled and released.
Section 5.9. Competition. (a) Each of CSX and each Vectura Party
covenants and agrees that it and its post-Closing controlled Affiliates shall
not, without the consent of ACL Holdings, at any time within the four-year
period immediately following the Closing Date (the "Noncompete Period"), either
alone or jointly with, or through or as a manager, adviser, consultant,
significant investor or agent for any person, directly or indirectly, be engaged
in or manage any barging business which competes with ACL and its Subsidiaries
in any geographic area in which ACL and its Subsidiaries conduct barging
business as of the date hereof (or on the Yangtze river system, on the Amazon
river system, on the Ganges river system or in Indonesia or Bangledesh) (the
"Business"), provided that
(i) nothing herein shall apply to (A) container or railcar barging
operations or coastal or ocean barging operations of CSX or
its controlled Affiliate, (B) barging operations ancillary and
incidental to CSX's other transportation businesses (which
ancillary and incidental barging operations shall (x) not be
substantially different in scope or nature than such barging
operations as may be currently in effect or (y) be a logical
extension of such other transportation businesses of CSX), (C)
interests in ACL Holdings issued in connection with the
Recapitalization Transactions, or (D) the chartering or hiring
by MariTrend, Inc. of barges in the ordinary course of
business consistent
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with past practices and ancillary and incidental to its
stevedoring operations, and
(ii) CSX or any of its post-Closing controlled Affiliates may
acquire an interest in any business, a portion of which
includes any business which competes with the Business, so
long as (x) such portion represents no more than 50% of such
acquired business' overall revenues during the fiscal year
preceding the date of such acquisition, (y) such portion is
fully disposed of within 365 days after the date of such
acquisition and (z) during such 365 day period, CSX (A) does
not make any significant capital expenditures or investment in
such portion except for capital expenditures consistent with
the past practices of, and in the ordinary course of business
of, such portion or as may be required in connection with
regulatory needs or with the maintenance of the business and
operations of such portion and (B) maintains such portion
separate from CSX's other businesses.
(b) Notwithstanding the foregoing: the Noncompete Period, with respect
to any line of business, shall terminate immediately upon ACL Holdings and its
Subsidiaries ceasing to be engaged in such line of business, whether through
discontinuance of operations or divestiture or joint venture of such line of
business through a transaction in which ACL Holdings does not retain control of
such line of business.
(c) Subject to Section 12.2, the Parties specifically acknowledge and
agree that the remedy at law for any breach of the foregoing provisions of this
Section 5.9 shall be inadequate and that the nonbreaching party, in addition to
any other relief available to it, shall be entitled to temporary and permanent
injunctive relief without the necessity of posting a bond or proving actual
damages resulting from any breach of the provisions of Section 5.9(a). In the
event that the provisions of this Section 5.9 should ever be deemed to exceed
the limitations provided by applicable law, the Parties agree that such
provisions shall be reformed to the maximum extent permitted under applicable
law.
Section 5.10. Termination of Discussions. Each Party hereby represents
and warrants to the other Parties that as of the date hereof such Party and its
Subsidiaries, representatives, directors, officers, agents and Affiliates have
terminated all discussions and negotiations with third parties respecting any
proposal to acquire (whether by merger, purchase of stock, purchase of assets or
otherwise) all or substantially all or any significant part of the business,
properties, capital stock or capital stock equivalents of ACL and its
Subsidiaries or the Vectura Parties and their Subsidiaries other than Maritrend,
Inc., as applicable (an "Acquisition Proposal") and is not a party to or bound
by any agreement for an Acquisition Proposal (other than a confidentiality
agreement) other than pursuant to the terms and conditions of this Agreement.
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Section 5.11. No Solicitation. Each Party agrees that, for a period of
eighteen months from the date of this Agreement, such Party and its Affiliates
shall not, directly or indirectly, solicit for employment or hire any employee
of ACL Holdings or its Subsidiaries who was, prior to the Closing Date, an
employee of such Party or its Subsidiary and had base salary compensation in
excess of $100,000 per year, provided that the foregoing shall not apply to any
general solicitation not specifically directed at employees of ACL Holdings or
its Subsidiaries made in a newspaper or other periodical of mass distribution or
any solicitation by a third party not directed to so solicit by such Party.
Section 5.12. Use of Business Names. To the extent the trademarks,
service marks, brand names or trade, corporate or business names of any Party or
any of its Affiliates which will not be Subsidiaries of ACL Holdings following
the Closing Date are used as of the date hereof by ACL or NMI on stationery,
signage, invoices, receipts, forms, packaging, advertising and promotional
materials, product, training and service literature and materials, computer
programs or like materials or appear on any fixed assets or equipment ("Marked
Materials"), after the Closing Date, ACL Holdings and its Subsidiaries shall
take efforts to minimize its usage of such Marked Materials, provided that ACL
Holdings and its Subsidiaries may use such Marked Materials for a period not to
exceed 60 days following the Closing Date without altering or modifying such
Marked Materials, or removing such trademarks, service marks, brand names, or
trade, corporate or business names, but shall not thereafter use such
trademarks, service marks, brand names or trade, corporate or business names in
any other manner without the prior written consent of the applicable Party.
ARTICLE VI
EMPLOYEE BENEFITS
Section 6.1. Termination of Participation. Except as otherwise provided in
this Article or in Schedule 6.1, the active participation of all ACL Employees
in each ACL Employee Benefit Plan, other than ACL-Only Employee Benefit Plans,
shall cease as of the Closing and no additional benefits shall be accrued
thereunder for such employees.
Section 6.2. ACL Holdings' Obligations. (a) ACL Holdings shall continue,
offer to continue, or cause one or more of its Subsidiaries to continue or offer
to continue the employment of all Vectura Current Employees, other than those
identified on Schedule 6.2(a) hereto, as of the Closing on substantially the
same terms and conditions as those enjoyed by such Vectura Current Employees
immediately prior to the Closing (all such Vectura Employees whose employment is
so continued or who accept such offers of employment being referred to as
"Vectura Continuing Employees"). ACL Holdings shall also take such steps, or
cause one or more of its Subsidiaries to take such steps, as may be necessary to
cause ACL Holdings and/or one or more of its Subsidiaries to assume the Vectura
Employee Benefit Plans identified on Schedule 6.2(a) (the "Assumed Vectura
Employee Benefit Plans"). Without limiting the generality of the foregoing: (i)
ACL Holdings shall take all steps necessary or
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appropriate so as to cause ACL Holdings or one or more of its Subsidiaries to
become, effective as of the Closing, the sole sponsors of the ACL-Only Employee
Benefit Plans and the Assumed Vectura Employee Benefit Plans, including without
limitation the appointment or reappointment of all trustees, custodians,
recordkeepers and other fiduciaries and service providers to the ACL-Only
Employee Benefit Plans and the Assumed Vectura Employee Benefit Plans (whether
by reappointing the persons currently serving as such or appointing new
persons), and CSX and its Affiliates, and Vectura and its Affiliates, shall
cease to be fiduciaries with respect to the ACL-Only Employee Benefit Plans and
the Assumed Vectura Employee Benefit Plans, respectively, as of the Closing; and
(ii) the Vectura Parties and ACL Holdings shall take all steps necessary and
appropriate to cause ACL Holdings or one or more of its Subsidiaries to succeed
to the rights and obligations of the Vectura Parties under any and all insurance
and/or service provider contracts as may be necessary for the maintenance of any
Assumed Vectura Employee Benefit Plan.
(b) ACL Holdings and its Subsidiaries shall, for a period of one year
after the Closing (the "Continuation Period"): (i) provide all ACL Employees and
Vectura Continuing Employees with welfare benefits (other than severance pay) no
less favorable in the aggregate than such welfare benefits provided to them
immediately before the Closing, (ii) provide ACL Employees and Vectura
Continuing Employees with other employee benefits that are no less favorable in
the aggregate than those provided to them immediately before the Closing, (iii)
waive any limitations regarding preexisting conditions under any welfare or
other employee benefit plan maintained by ACL Holdings (and/or any of its
Subsidiaries) for the benefit of ACL Employees and Vectura Continuing Employees
or in which ACL Employees and Vectura Continuing Employees participate after the
Closing and to provide that to the extent any such individual has, before the
Closing, satisfied in whole or in part any annual deductible or paid any
out-of-pocket or co-payment expenses under the applicable Employee Benefit Plan,
such individual shall be credited therefor under the corresponding provisions of
the corresponding plan of ACL Holdings and its Subsidiaries in which such
individual participates after the Closing, (iv) for all purposes under all
compensation and benefit plans and policies applicable to employees of ACL
Holdings and its Subsidiaries, including those referred to in this Section 6.2,
treat all service by ACL Employees with ACL or any of its Affiliates before the
Closing (including any service credited by ACL or any of its Affiliates), and
all service by Vectura Continuing Employees with Vectura or any of its
Affiliates before the Closing (including any service credited by Vectura or any
of its Affiliates), as service with ACL Holdings and its Subsidiaries, except to
the extent such treatment would result in duplication of benefits and except for
purposes of benefit accrual under defined benefit pension plans in which they
did not participate before the Closing, and (v) establish and maintain "mirror"
plans to CSX's Supplemental Retirement Plan, Special Retirement Plan and
Supplementary Savings and Incentive Award Deferral Plan (the "Non-Qualified
Plans") providing the same terms as the Non-Qualified Plans. Following the
Closing, the severance pay and benefits, if any, provided to Vectura Continuing
Employees and ACL Employees (other than those who are covered by the American
Commercial Lines, Inc. Severance Pay Plan and those who are
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party to individual employment agreements providing for severance pay and
benefits) shall be the same for similarly situated individuals regardless of
whether they are Vectura Continuing Employees or ACL Employees. ACL Holdings
shall assume all liabilities and obligations with respect to ACL Employees under
the Non-Qualified Plans as of the Closing to the extent such liabilities are
accrued on the appropriate ACL Balance Sheet.
(c) Notwithstanding any provision of this Agreement, ACL Holdings and
its Subsidiaries shall not assume any liability or obligation under the
"American Commercial Lines, Inc. Severance Pay Plan" unless such plan is amended
prior to the Closing Date to eliminate all references to the "CSX Administrative
Committee" and replace such references with references to ACL.
(d) Notwithstanding any provision of this Agreement, ACL Holdings and
its Subsidiaries shall not assume sponsorship of, and shall not assume any
liability or obligation under, the "Vectura Group, Inc. 1997 Phantom Stock Plan
for Senior Management," except for the payment of amounts that become due
thereunder as a result of the consummation of the transactions contemplated by
this Agreement not in excess of the amounts set forth on Schedule 6.2(d) hereto,
and such liabilities and obligations that are not assumed by ACL Holdings shall
be Vectura Excluded Liabilities.
(e) No provision of this Article VI shall be construed to require ACL
Holdings and its Subsidiaries to continue the employment of any ACL Employee or
Vectura Continuing Employee for any period of time after the Closing, nor that
they enjoy any particular terms and conditions of employment except as
specifically provided in Section 6.2(b).
Section 6.3. Savings Plans. (a) Effective as of the Closing Date, ACL
Holdings shall adopt, establish or cause to be established a defined
contribution plan (the "ACL Holdings Savings Plan") (which may, but need not, be
the Vectura Group, Inc. Savings Plan (the "Vectura Savings Plan")) to accept a
transfer of assets and liabilities from the Tax Savings Thrift Plan for
Employees of CSX Corporation and Affiliated Companies (the "CSX Savings Plan"),
as provided for in this Section 6.3. The ACL Holdings Savings Plan shall have
features concerning the timing and method of distributions such that a spin-off
of assets and liabilities from the CSX Plan to the ACL Holdings Savings Plan
will not cause a violation of Section 411(d)(6) of the Code.
(b) As soon as practicable after the Closing, following the (i) receipt
by ACL of a copy of a favorable determination letter or ACL Holdings'
certification to ACL, in a manner reasonably acceptable to ACL, that the ACL
Holdings Savings Plan is qualified under Section 401(a) of the Code and the
related trust is exempt from tax under Section 501(a), of the Code, and (ii)
receipt by ACL Holdings of a copy of a favorable determination letter or a
certification by CSX to ACL Holdings, in a manner reasonably acceptable to ACL
Holdings, that the CSX Savings Plan is qualified under Section 401(a) of the
Code and the related trust is exempt from tax under Section 501(a)
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of the Code, CSX shall direct the trustee of the trust funding the CSX Savings
Plan to transfer to the trustee of the trust established to fund the ACL
Holdings Savings Plan, the account balance in the CSX Savings Plan of each ACL
Employee with an account balance in the CSX Savings Plan (each such ACL
Employee, an "ACL Savings Plan Employee"). Without limiting the generality of
the foregoing, if the ACL Holdings Savings Plan is the Vectura Savings Plan,
such transfer shall not take place unless and until ACL Holdings or the Vectura
Parties provide CSX with evidence satisfactory to CSX that the IRS has approved
the submission described on Schedule 4.17(b) and any and all corrective action
required with respect thereto has been taken. Such transfer shall be made in
kind or in cash as mutually agreed by ACL Holdings and CSX, or in cash if no
such agreement is made; provided, that all outstanding participant loans with
respect to the account balances of the ACL Savings Plan Employees shall be
transferred to the ACL Holdings Savings Plan in kind. The amounts required to be
transferred pursuant to the preceding sentences shall be determined as of a
valuation date under the CSX Savings Plan occurring coincident with or
immediately following the Closing Date, or as of such later valuation date as
may be mutually selected by ACL Holdings and CSX. Such transfer shall account
appropriately for earnings and losses during the period from the applicable
valuation date to the actual date of the transfer (the "ACL Transfer Date").
From the Closing until the ACL Transfer Date, ACL Holdings shall cause to be
made continuous payroll deductions each pay period from the pay of each ACL
Savings Plan Employee who has one or more loans outstanding from the CSX Savings
Plan of amounts sufficient to pay the installment payments of principal and
interest on each such loan as required by the promissory note or other evidence
of indebtedness relating to such loan. Such deducted amounts shall be paid by
ACL Holdings to the trustee of the CSX Savings Plan who shall accept such
payments for a credit against such loans. On or prior to the Closing, CSX, ACL
or another Affiliate of CSX shall make a contribution to the CSX Savings Plan of
the amounts of any salary reduction contributions, employer matching
contributions, and profit sharing contributions attributable to or payable on
account of each ACL Savings Plan Employee under the terms of the CSX Savings
Plan for any time period ending on the Closing Date. Following such transfer,
ACL Holdings shall be responsible for all obligations and liabilities with
respect to the account balances of the ACL Savings Plan Employees.
Section 6.4. Plan Transfers. (a) ACL Holdings, CSX, ACL and the Vectura
Parties shall cooperate in making all appropriate filings and taking all
appropriate actions required to implement the provisions of Section 6.3,
provided that the Parties acknowledge that ACL Holdings shall be responsible for
complying with any requirements and applying for any determination letters with
respect to the ACL Holdings Savings Plan. No transfer hereunder shall take place
prior to the 31st day following the filing of any required Forms 5310A in
connection therewith.
(b) ACL and Vectura acknowledge that the transfers of assets and
liabilities contemplated by Section 6.3 may occur before ACL Holdings receives a
favorable determination letter with respect to the ACL Holdings Savings Plan.
ACL Holdings accordingly shall indemnify CSX and its Affiliates from and against
any
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liabilities that they may incur as a result of a failure of the ACL Holdings
Savings Plan to be qualified under Section 401(a) of the Code or of the related
trust to be exempt from tax under Section 501(a) of the Code.
Section 6.5. WARN Act. ACL Holdings shall be responsible for, and shall
indemnify, defend and hold harmless the Vectura Parties and CSX and its
Affiliates with respect to, compliance with the federal Worker Adjustment
Retraining Notification Act and all similar state and local statutes and
regulations (collectively, the "WARN Act") and all liabilities and obligations
related thereto, in any case which arise as a result of any violation by ACL
Holdings of its obligation under Section 6.2 or any action by ACL Holdings or
any of its Affiliates on or after the Closing Date. All communications of ACL or
any of its Affiliates made before the Closing Date to Current Employees with
respect to WARN Act matters shall be reasonably acceptable to Vectura.
ARTICLE VII
TAX MATTERS
Section 7.1. Tax Returns. (a) CSX hereby represents and warrants to the
Vectura Parties that, except as set forth in Schedule 7.1(a) and except as would
not have a material adverse effect on ACL, (i) all Returns required to be filed
(taking into account extensions) on or before the Closing Date for taxable
periods ending on or before the Closing Date by, or with respect to any
activities of, or property owned by, ACL or its Subsidiaries, have been or will
be filed in accordance with all applicable laws and are true, correct and
complete as filed, and all Taxes shown as due on such Returns have been or will
be timely paid, (ii) all Taxes required to be withheld by ACL or its
Subsidiaries have been withheld, and such withheld Taxes have either been duly
and timely paid to the proper Government Authorities or set aside in accounts
for such purpose if not yet due, (iii) no Returns filed by ACL or any of its
Subsidiaries are currently under audit by any Taxing Authority or are the
subject of any judicial or administrative proceeding, and no Taxing Authority
has given notice in writing that it will commence any such audit, (iv) no Taxing
Authority is now asserting against ACL or any of its Subsidiaries any deficiency
or claim for Taxes or any adjustment of Taxes, (v) other than any Tax sharing
agreement between CSX, on the one hand, and ACL or a Transferred ACL Subsidiary,
on the other hand, neither ACL nor any of its Subsidiaries is subject to or
bound by any Tax sharing agreement, and since 1984, neither ACL nor any of its
Subsidiaries has ever been a member of a consolidated group, other than one for
which CSX was the common parent, (vi) neither ACL nor any of its Subsidiaries
has waived any statute of limitations with respect to any Tax or agreed to any
extension of time for filing any Return which has not been filed, and neither
ACL nor any of its Subsidiaries has consented to extend to a date later than the
date hereof the period in which any Tax may be assessed or collected by any
Taxing Authority, (vii) there are no liens for Taxes (other than ACL Permitted
Encumbrances (other than such encumbrances described in clause (iii) of the
definition of ACL Permitted Encumbrances)) upon any of the assets of ACL or any
of its Subsidiaries and
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(viii) no Transferred Foreign ACL Subsidiary has been a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
(b) Each of the Vectura Parties hereby represents and warrants to CSX
that, except as set forth in Schedule 7.1(b) and except as would not have a
material adverse effect on the Vectura Parties or their Subsidiaries, (i) all
Returns required to be filed (taking into account extensions) on or before the
Closing Date for taxable periods ending on or before the Closing Date by, or
with respect to any activities of, or property owned by, any of the Vectura
Parties or any of their Subsidiaries, have been or will be filed in accordance
with all applicable laws and are true, correct and complete as filed, and all
Taxes shown as due on such Returns have been or will be timely paid, (ii) all
Taxes required to be withheld by any of the Vectura Parties or any of their
Subsidiaries have been withheld, and such withheld Taxes have either been duly
and timely paid to the proper Government Authorities or set aside in accounts
for such purpose if not yet due, (iii) no Returns filed by any of the Vectura
Parties or any of their Subsidiaries are currently under audit by any Taxing
Authority or are the subject of any judicial or administrative proceeding, and
no Taxing Authority has given notice in writing that it will commence any such
audit, (iv) no Taxing Authority is now asserting against any of the Vectura
Parties or any of their Subsidiaries any deficiency or claim for Taxes or any
adjustment of Taxes, (v) other than a Tax sharing Agreement between Vectura, on
the one hand, and a Subsidiary of Vectura, on the other hand, none of the
Vectura Parties or any of their Subsidiaries is subject to or bound by any Tax
sharing agreement, and, since March 1993, none of the Vectura Parties has ever
been a member of a consolidated group, other than one for which Vectura was the
common parent, (vi) none of the Vectura Parties nor any of their Subsidiaries
has waived any statute of limitations with respect to any Tax or agreed to any
extension of time for filing any Return which has not been filed, and none of
the Vectura Parties nor any of their Subsidiaries has consented to extend to a
date later than the date hereof the period in which any Tax may be assessed or
collected by any Taxing Authority, and (vii) there are no liens for Taxes (other
than Vectura Permitted Encumbrances (other than such encumbrances described in
clause (iii) of the definition of Vectura Permitted Encumbrances)) upon any of
the assets of the Vectura Parties or any of their Subsidiaries.
(c) Any Tax sharing agreement between CSX, on the one hand, and ACL or
any of the Transferred ACL Subsidiaries, on the other hand, shall be terminated
as of the Closing Date and shall thereafter have no further effect for any
taxable year (whether the current year, a future year, or a past year). Any
payments required by any such Tax sharing agreement shall be made at or prior to
the termination thereof. Any Tax sharing agreement between Vectura, on the one
hand, and any Transferred NMI Holdings Subsidiary, on the other hand, shall be
terminated as of the Closing Date and shall thereafter have no further effect
for any taxable year (whether the current year, a future year, or a past year).
Any payments required by any such Tax sharing agreement shall be made at or
prior to the termination thereof.
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Section 7.2. Definitions. For purposes of this Agreement, the following
terms shall have the meanings ascribed to them below:
(a) "Income Taxes" means federal, state, local or foreign income taxes
(including franchise taxes measured by or with respect to net income) together
with any interest or penalties imposed with respect thereto, including any
amendment thereto.
(b) "Returns" means returns, declarations, statements, reports, forms or
other documents or written information, including partnership Form K-1s,
required to be filed with or supplied to any Taxing Authority, including any
amendment thereto.
(c) "Taxes" means (i) all taxes (whether federal, state, county, local
or foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, windfall profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, employment,
excise, stamp, premium, capital stock, production, business and occupation,
disability, severance, or real or personal property taxes, fees, assessments or
charges of any kind whatsoever imposed by any Taxing Authority together with any
interest or penalties imposed with respect thereto and (ii) any obligations
under any agreements or arrangements with respect to any taxes described in
clause (i) above.
(d) "Taxing Authority" means any Government Authority having
jurisdiction over the assessment, determination, collection or other imposition
of any Tax.
Section 7.3. Tax Indemnification by CSX. Subject to Section 7.4(b), CSX
shall be liable for, and shall hold the Vectura Parties, CVC, ACL Holdings, and
their respective Subsidiaries, Affiliates and any successor thereto harmless
from and against any and all Taxes of CSX, American Commercial Lines, Inc., ACL
Holdings, ACL or any of their respective current or former Subsidiaries that
were Subsidiaries prior to the Closing, and any and all Taxes with respect to
the assets and liabilities of CSX acquired by ACL Holdings pursuant to Section
2.1, in each case, attributable to any taxable period ending on or before the
Closing Date or allocable under Section 7.6 to the portion, ending on the
Closing Date, of a taxable period that begins on or before the Closing Date and
ends after the Closing Date (regardless of when a claim is made by a Taxing
Authority with respect to such Taxes) to the extent that such Taxes are not
reflected in the reserve for Tax liability included in Adjusted Total Current
Liabilities for purposes of determining the ACL Amount (as distinguished from
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income).
Section 7.4. Tax Indemnification by the Vectura Parties. The Vectura
Parties shall be liable for, and shall hold CSX, ACL Holdings, and their
respective Subsidiaries, Affiliates and any successor thereto harmless from and
against (a) any and all Taxes of the Vectura Parties or any of their current or
former Subsidiaries that were Subsidiaries prior to the Closing, and any and all
Taxes with respect to the assets and liabilities of the Vectura Parties acquired
by ACL Holdings pursuant to Section 2.1, in
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each case, attributable to any taxable period ending on or before the Closing
Date or allocable under Section 7.6 to the portion, ending on the Closing Date,
of a taxable period that begins on or before the Closing Date and ends after the
Closing Date (regardless of when a claim is made by a Taxing Authority with
respect to such Taxes) to the extent that such Taxes are not reflected in the
reserve for Tax liability included in Total Current Liabilities for purposes of
determining the NMI Holdings Amount (as distinguished from any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) and (b) any and all Taxes resulting from any acts taken, or caused to be
taken, by any of the Vectura Parties or CVC occurring not in the ordinary course
of business after the Closing on the Closing Date other than actions
contemplated by this Agreement and the documents implementing this Agreement
(including the ACL Holdings LLC Agreement).
Section 7.5. Tax Indemnification by ACL Holdings. ACL Holdings and its
Subsidiaries shall be liable for, and shall hold CSX, each Vectura Party and
each of their respective Subsidiaries and their respective officers, directors
and employees and any successor thereto harmless from and against any and all
Taxes of ACL Holdings and each of its Subsidiaries and any and all Taxes with
respect to the assets and liabilities acquired by ACL Holdings pursuant to
Section 2.1, in each case, for any taxable period beginning after the Closing
Date or allocable under Section 7.6 to the portion, beginning after the Closing
Date, of a taxable period that begins on or before the Closing Date and ends
after the Closing Date (other than Income Taxes for such periods or portions
thereof of any person that would not have been imposed on such person but for
such person's direct or indirect acquisition or ownership of membership
interests in ACL Holdings).
Section 7.6. Allocation of Certain Taxes. (a) The Parties agree that if
any Transferred Foreign ACL Subsidiary is permitted but not required under
applicable foreign Income Tax laws to treat the day before the Closing Date or
the Closing Date as the last day of a taxable period, such day shall be treated
as the last day of a taxable period.
(b) For purposes hereof, in the case of any Taxes that are imposed on a
periodic basis and are payable for a period that begins on or before the Closing
Date and ends after the Closing Date, the portion of such Tax that shall be
allocable to the portion of the period ending on the Closing Date shall (i) in
the case of any Taxes, other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Taxes for the entire period,
whether actually paid before, during, or after such period, multiplied by a
fraction the numerator of which is the number of calendar days in the period
ending on (and including) the Closing Date and the denominator of which is the
number of calendar days in the entire period, and (ii) in the case of any Taxes
based upon or related to income or receipts (including but not limited to
withholding Taxes), be deemed equal to the amount which would be payable if the
taxable year ended on the close of business on the Closing Date. Any credits or
refunds for such a period shall be prorated, based upon the fraction employed in
clause
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(i) or (ii) of the preceding sentence, as applicable. Such clause (i) of the
second preceding sentence shall be applied with respect to Taxes, if any, for
such period relating to capital (including net worth or long-term debt) or
intangibles by reference to the level of such items on the Closing Date. The
portion of any Taxes (or refunds) that are imposed on a periodic basis, payable
for a period that begins on or before the Closing Date and ends after the
Closing Date and not allocable to the portion of such period ending on the
Closing Date shall be allocable to the portion of the period beginning after the
Closing Date.
Section 7.7. Survival. The provisions of this Article VII, other than
Sections 7.1(a) and (b), shall survive the Closing until the expiration of all
applicable statutes of limitations.
Section 7.8. Cooperation and Exchange of Information.
(a) As soon as practicable, after the written request of CSX, from and
after the Closing Date, ACL Holdings shall, and shall cause its Subsidiaries to,
provide CSX with such cooperation and shall deliver to CSX such information and
data concerning ACL Holdings, its Subsidiaries and their Affiliates and make
available during normal business hours such knowledgeable employees of ACL
Holdings, the Transferred ACL Subsidiaries, or their Subsidiaries as CSX may
reasonably request, including providing the information and data required by
CSX's or ACL's customary tax and accounting questionnaires, in order to enable
CSX or any of its Subsidiaries to complete and file all Returns which they may
be required to file with respect to the operations and business of ACL, ACL's
Subsidiaries and their Affiliates for pre-Closing periods or to respond to
audits or other inquiries by any Taxing Authorities with respect to such
operations and to otherwise enable CSX and its Subsidiaries to satisfy their
accounting, tax and other legitimate requirements.
(b) ACL Holdings shall promptly notify CSX upon receipt of notice of any
Tax audit or any proposed assessment relating to ACL Holdings or any or its
Subsidiaries or with respect to the assets and liabilities of CSX acquired by
ACL Holdings pursuant to Section 2.1 if such audit or proposed assessment could
give rise to a claim against CSX for indemnification pursuant to Section 7.3 and
shall thereafter promptly forward to CSX copies of any communications received
from or sent to any Taxing Authority by ACL Holdings or any of its Subsidiaries
in connection with any audit or proceeding with respect to which CSX is the
Controlling Party (as defined below); provided, however, that the failure of ACL
Holdings to give CSX such prompt notice or to forward such communications as
required herein shall not relieve CSX of any obligations under Section 7.3,
except to the extent that CSX is actually prejudiced thereby. CSX shall promptly
notify ACL Holdings upon receipt of notice of any Tax audit or any proposed
assessment relating to any assets contributed by CSX or any of its Subsidiaries
to ACL Holdings or any of its Subsidiaries if such audit or proposed assessment
could adversely affect (including with respect to later periods) ACL Holdings.
Any such notice must describe the type of Tax involved in the audit or proposed
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assessment and the tax year(s) at issue, and must include a copy of any
materials received from the applicable Taxing Authority in connection therewith.
In the case of any audit or other proceeding with respect to a proposed
assessment described in this Section 7.8(b), the Controlling Party shall be
entitled to appoint as lead counsel any legal counsel of its choice and shall
control the conduct of the audit or proceeding. In the case of any such audit or
other proceeding, (i) the Controlling Party shall provide the Noncontrolling
Party with a timely and reasonably detailed account of each stage of such audit
or proceeding and a copy of the portions of all documents relating to such audit
or proceeding which are relevant to any Tax for which the Noncontrolling Party
may be required to indemnify or may otherwise be liable, (ii) the Controlling
Party shall consult with the Noncontrolling Party before taking any significant
action in connection with such audit or proceeding that might adversely affect
the Noncontrolling Party, (iii) the Controlling Party shall consult with the
Noncontrolling Party and offer the Noncontrolling Party an opportunity to
comment before submitting any written materials prepared or furnished in
connection with such audit or proceeding (including, to the extent practicable,
any documents furnished to the applicable Taxing Authority in connection with
any discovery request) to the extent such materials concern matters in such
audit or proceeding that could adversely affect the Noncontrolling Party, (iv)
unless the Noncontrolling Party otherwise consents in writing, the Controlling
Party shall defend such audit or other proceeding diligently and in good faith
as if the Controlling Party were the only party in interest in connection with
such audit or other proceeding to the extent such audit or proceeding might
adversely affect the Noncontrolling Party, and the Noncontrolling Party shall
reasonably facilitate to the extent requested by the Controlling Party, and
shall not impede, such audit or proceeding, (v) except in the case of any audit
or proceeding with respect to consolidated, combined, or unitary Tax Returns of
CSX or any of its Subsidiaries (other than such a Return that includes solely
ACL Holdings or any of its Subsidiaries), the Controlling Party shall not
settle, compromise or abandon any such audit or proceeding without obtaining the
prior written consent, which consent shall not be unreasonably withheld, of the
Noncontrolling Party if such settlement, compromise or abandonment might have an
adverse impact on the Noncontrolling Party. In the event that the Noncontrolling
Party reasonably withholds such consent pursuant to the preceding clause (v),
the parties shall negotiate in good faith to resolve their differences and,
failing that, the arbitration procedures described in Section 10.9 shall apply
(with expedited time frames where necessary to comply with governmental
deadlines in connection with such audit or proceeding) to resolve the parties'
dispute in connection with such audit or proceeding. "Controlling Party" shall
mean (w) CSX for (i) any audit or proceeding relating to a taxable period that
ends on or before the Closing Date and (ii) any audit or proceeding for any
consolidated, combined or unitary Return that includes CSX or any of its
Subsidiaries (except in the case of this clause (ii) for a consolidated,
combined or unitary Return that includes solely ACL Holdings or any of its
Subsidiaries) and (x) ACL Holdings for any audit or proceeding relating to a
taxable period that includes but does not end on the Closing Date with respect
to ACL Holdings or the applicable Subsidiary, or any taxable period that begins
after the Closing Date with respect to ACL Holdings or the applicable
Subsidiary. "Noncontrolling Party" shall mean (y) CSX in the case of audits or
proceedings with respect to which ACL Holdings is the Controlling Party and
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(z) ACL Holdings in the case of audits or proceedings with respect to which CSX
is the Controlling Party. The Controlling Party and the Noncontrolling Party
shall cooperate reasonably and in good faith in connection with any audit or
other proceeding that is subject to this Section 7.8(b). For purposes of this
Section 7.8(b), ACL Holdings shall be deemed to be adversely affected or liable
for Tax if the Vectura Parties or their transferees that are or were, as the
case may be, members of ACL Holdings are adversely affected or liable for Tax.
Notwithstanding any other provision, neither CVC, any of the Vectura Parties nor
any other person shall have any right to receive or obtain any information
relating to, or have any rights with respect to, any consolidated, combined or
unitary Taxes of CSX or any of its Subsidiaries other than information and
rights relating solely to items of ACL Holdings or its Subsidiaries.
Furthermore, any rights of ACL Holdings with respect to any consolidated,
combined or unitary Taxes of CSX or any of its Subsidiaries shall apply only to
the extent that ACL Holdings might be adversely affected, it being understood
that any claim or issue that would increase Tax for which CSX is responsible and
liable hereunder and decrease Tax for which ACL Holdings is responsible and
liable hereunder would not adversely affect ACL Holdings. CSX shall not amend
any consolidated, combined or unitary Return to the extent such amendment would
adversely impact ACL Holdings or any Subsidiary, except to the extent otherwise
required by law or pursuant to an audit or proceeding initiated by a Taxing
Authority.
(c) Section 5.1(c) shall govern the responsibilities of the Parties and
ACL Holdings with respect to records, schedules and work papers relating to any
Returns or Tax audits. All information obtained from the Parties with respect to
Taxes shall be kept confidential, subject to applicable legal requirements.
(d) CSX shall deliver to ACL Holdings reasonably promptly after the
Closing a schedule setting forth the adjusted tax basis and holding period of
each of the assets of the Transferred ACL Subsidiaries (other than the
Transferred Foreign ACL Subsidiaries) and the tax basis and holding period of
the stock of the Transferred Foreign ACL Subsidiaries, in each case, as of the
Closing Date and shall provide ACL Holdings, as soon as practicable, but in any
event within 30 business days after the later of a written request from ACL
Holdings and the receipt by CSX from ACL Holdings of applicable information, if
any, required by CSX in order to satisfy such request, with any other reasonably
requested Tax information relating to such assets and stock. The Vectura Parties
shall deliver to ACL Holdings reasonably promptly after the Closing a schedule
setting forth the adjusted tax basis and holding period of each of the assets of
the Transferred NMI Subsidiaries and the assets acquired by ACL Holdings
pursuant to Section 2.1 from the Vectura Parties, in each case, as of the
Closing Date, and shall provide ACL Holdings as soon as practicable, but in any
event within 30 days after a request by ACL Holdings, with any other reasonably
requested Tax information relating to such assets.
Section 7.9. Payment of Indemnified Taxes. Any Taxes for which an
indemnifying party is liable under Section 7.3, 7.4 or 7.5 shall be paid
promptly by the indemnifying party.
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Section 7.10. Filing Responsibility. (a) CSX shall, with the reasonable
cooperation and assistance of ACL Holdings and its Subsidiaries after CSX's
reasonable request, prepare and file or shall cause ACL Holdings or the
Transferred ACL Subsidiaries, as the case may be, to prepare and file, with
respect to ACL Holdings and the Transferred ACL Subsidiaries, all Returns with
respect to Taxes of ACL Holdings or the Transferred ACL Subsidiaries required to
be filed (taking into account extensions) prior to the Closing Date and any
consolidated, combined or unitary Returns that include CSX or any post-Closing
Subsidiary of CSX, and all such Returns shall be filed in a manner consistent
with past custom and practice (in the case of such consolidated, combined or
unitary Returns, to the extent such Returns relate to ACL Holdings or the
Transferred ACL Subsidiaries), except to the extent otherwise required by law.
Any Taxes required to be paid in connection with such Returns shall be paid by
CSX or the applicable taxpayer with respect to such Taxes.
(b) Subject to the provisions of Section 7.11(d), ACL Holdings shall
file or cause to be filed all Returns for which CSX does not have filing
responsibility pursuant to Section 7.10(a) with respect to ACL Holdings and its
Subsidiaries; provided, however, that any such Return for Taxes for a taxable
period that ends on or before the Closing Date or for a period that includes but
does not end on the Closing Date, in either case, for which CSX bears any
responsibility or liability under this Article VII shall be (i) presented at
least 35 business days prior to the due date (including extensions) of such
Return to CSX for its review, (ii) revised prior to filing to reflect any
reasonable comments requested in good faith by CSX in writing within 25 business
days after such presentation of such Return to CSX and (iii) filed in a manner
consistent with past custom and practice, except to the extent otherwise
required by law. CSX shall pay ACL Holdings on or before the due date (taking
into account extensions) of any such Return the excess, if any, of (x) the Taxes
required to be paid with such Return for which CSX is responsible pursuant to
Section 7.3 (determined without regard to Section 7.12) over (y) any previous
estimated Tax payments in respect of such Taxes borne by CSX (without
duplication of any estimated Tax payments taken into account pursuant to Section
2.4), or ACL Holdings shall pay CSX the excess, if any, of (y) over (x)on or
before such due date (including extensions).
(c) ACL Holdings (i) shall present at least 35 business days prior to
the due date (including extensions) any federal Income Tax Returns of ACL
Holdings to CSX for its review and shall revise such Returns prior to filing to
reflect any reasonable comments requested in good faith by CSX in writing within
25 business days after such presentation of such Returns to CSX and (ii) at
CSX's written request, shall make available to CSX for CSX's review at least 30
business days prior to the due date (including extensions) any State, local or
foreign Income Tax Returns (other than estimated Returns) of ACL Holdings or its
Subsidiaries.
(d) Provisions comparable to clauses (a) through (c) above shall apply
with respect to the Vectura Parties in connection with the Vectura contributed
assets.
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Section 7.11. Refunds. (a) CSX shall be entitled to any refunds or
credits of Taxes of or with respect to ACL Holdings or any Transferred ACL
Subsidiary and the assets acquired by ACL Holdings from CSX or any of its
Subsidiaries pursuant to Section 2.1, in each case, attributable to or arising
in taxable periods (or allocable under Section 7.6 to a portion of a taxable
period) ending on or before the Closing Date (plus any interest received with
respect thereto), but not in duplication of any refunds or credits taken into
account pursuant to Section 2.4.
(b) The Vectura Parties shall be entitled to any refunds or credits of
Taxes of or with respect to any of the Transferred NMI Subsidiaries and the
assets acquired by ACL Holdings from the Vectura Parties pursuant to Section
2.1, in each case, attributable to or arising in taxable periods (or allocable
under Section 7.6 to a portion of a taxable period) ending on or before the
Closing Date (plus any interest received with respect thereto) but not in
duplication of any refunds or credits taken into account pursuant to Section
2.4.
(c) ACL Holdings shall, or shall cause its Subsidiaries to, promptly
forward to CSX or the Vectura Parties, respectively, or reimburse CSX or the
Vectura Parties, respectively, for, any refund or credits due such Parties
(pursuant to the terms of this Article VII) after receipt thereof.
(d) None of the Transferred ACL Subsidiaries shall elect to carry back
any item of loss, deduction or credit which arises in any taxable period ending
after the Closing Date into any taxable period ending on or before the Closing
Date.
Section 7.12. Limitation on Tax Indemnification. No person entitled to
indemnification pursuant to Section 7.3 or 7.4 shall assert rights of
indemnification for Taxes unless and until the aggregate of all Taxes for which
such indemnification is sought pursuant to such Section exceeds $50,000.
Section 7.13. Article VII to Control. To the extent that there is a
conflict between any provision of Article VII and any other provision of this
Agreement, the provisions of Article VII shall control.
Section 7.14. Tax Treatment. Except (in the case of clauses (i) and
(ii)) in the event of certain post-Closing transactions specifically
contemplated by Exhibit A attached hereto, each of the Parties and ACL Holdings
shall take no action inconsistent with, and shall make or cause to be made all
applicable elections with respect to: (i) the treatment of ACL Holdings as a
partnership and each of the Transferred ACL Subsidiaries (other than the
Transferred Foreign ACL Subsidiaries) and each of the Transferred NMI
Subsidiaries as a division of ACL Holdings for United States federal Income Tax
purposes, (ii) the treatment of ACL Holdings as not a publicly traded
partnership for United States federal income tax purposes, and (iii) the
treatment of CSX as having contributed stock of the Transferred Foreign ACL
Subsidiaries and the assets of ACL and the Transferred ACL Subsidiaries (other
than the Transferred Foreign ACL Subsidiaries) to ACL Holdings without
recognition of
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gain at the time of such contribution for purposes of the Code and (iv) the
treatment of NMI as having contributed the assets and liabilities of the
Transferred NMI Subsidiaries to ACL Holdings without recognition of gain at the
time of such contribution for purposes of the Code.
ARTICLE VIII
CONDITIONS OF THE VECTURA PARTIES' OBLIGATIONS TO CLOSE
The Vectura Parties' obligations to consummate the Recapitalization
Transactions shall be subject to the satisfaction or waiver by the Vectura
Parties, on or prior to the Closing Date, of all of the following conditions:
Section 8.1. Representations, Warranties and Covenants of CSX. The
representations and warranties of CSX contained in this Agreement shall be true
and correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, except for representations and warranties that speak as of a specific
date or time other than the Closing Date (which need only be true and correct in
all material respects as of such date or time), and the covenants and agreements
of CSX to be performed on or before the Closing Date in accordance with this
Agreement shall have been duly performed in all material respects.
Section 8.2. Filings; Consents; Waiting Periods. All significant
governmental consents or approvals that are required to be obtained in
connection with the Recapitalization Transactions shall have been received,
including, but not limited to, approvals under the HSR Act.
Section 8.3. No Injunction. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or Government
Authority of competent jurisdiction that is in effect that restrains or
prohibits the consummation of the Recapitalization Transactions.
Section 8.4. Financing. ACL Holdings shall have received the cash
proceeds from the financing transactions contemplated by the Senior Credit
Letter and the High Yield Letters (or substitutes therefor) on economic terms,
in the aggregate, not materially more burdensome than those set forth in such
letters (as provided in the understanding regarding "best efforts" set forth in
Section 5.2(c)) (it being understood and agreed that consummation of the
financing transaction contemplated by the Equity Letters shall not be a
condition to the Vectura Parties' obligations under this Agreement).
Section 8.5. Indebtedness. There shall exist no Funded Debt of ACL,
other than ACL Assumed Funded Debt, that could be a liability of ACL Holdings or
its Subsidiary.
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Section 8.6. Documents. All material documents required to effect the
Recapitalization Transactions (including in respect of the Financing Letters)
shall be reasonably satisfactory in form and substance to the Vectura Parties.
Section 8.7. Material Adverse Change. From the date hereof through the
Closing Date, there shall have occurred no material adverse change with respect
to ACL.
Section 8.8. Transition Services Agreement. A transition services
agreement between ACL and CSX shall have been executed and delivered by each of
the parties thereto.
ARTICLE IX
CONDITIONS TO CSX'S OBLIGATION TO CLOSE
CSX's obligation to consummate the Recapitalization Transactions shall
be subject to the satisfaction or waiver by CSX, on or prior to the Closing
Date, of all of the following conditions:
Section 9.1. Representations, Warranties and Covenants of the Vectura Parties.
The representations and warranties of the Vectura Parties contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date, except for representations and warranties
that speak as of a specific date or time other than the Closing Date (which need
only be true and correct in all material respects as of such date or time), and
the covenants and agreements of the Vectura Parties to be performed on or before
the Closing Date in accordance with this Agreement shall have been duly
performed in all material respects.
Section 9.2. Filings; Consents; Waiting Periods. All significant
governmental consents or approvals that are required to be obtained in
connection with the Recapitalization Transactions shall have been received,
including, but not limited to, approvals under the HSR Act.
Section 9.3. No Injunction. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or Government
Authority of competent jurisdiction that is in effect that restrains or
prohibits the consummation of the Recapitalization Transactions.
Section 9.4. Indebtedness. There shall exist no Funded Debt of the
Vectura Parties that could be a liability of ACL Holdings or its Subsidiary.
Section 9.5. Documents. All material documents required to effect the
Recapitalization Transactions (including in respect of the Financing Letters)
shall be reasonably satisfactory in form and substance to CSX.
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Section 9.6. Solvency Opinion. CSX shall have received a solvency
opinion with respect to ACL and ACL Holdings addressed to CSX and in form and
substance as provided to sources of financing for the Recapitalization
Transactions.
Section 9.7. Material Adverse Change. From the date hereof through the
Closing Date, there shall have occurred no material adverse change with respect
to the Vectura Parties.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.1. Survival. None of the representations, warranties, covenants or
agreements of the Parties contained in this Agreement or in any Schedule or any
certificate, document or other instrument delivered in connection herewith shall
survive the Closing, other than the covenants and agreements set forth in
Sections 5.1(b), 5.1(c), 5.3, 5.9, 5.11 and 5.12 and the covenants and
agreements set forth in Articles VI, VII, X and XII. Solely for the avoidance of
doubt, the foregoing shall not impair, limit or otherwise affect the rights of
the Parties in connection with any claim for indemnification otherwise properly
made within the time periods and pursuant to the procedures set forth below.
Section 10.2. Indemnification. (a) Following the Closing and subject to
the terms and conditions provided in this Article X, CSX shall indemnify, defend
and hold harmless ACL Holdings and its Subsidiaries and their respective
officers, directors and employees other than any holder of capital interests in
ACL Holdings or its Affiliate (each, an "ACL Holdings Indemnified Party") from
and against, and shall reimburse each ACL Holdings Indemnified Party for, all
Adverse Consequences imposed upon or incurred by such ACL Holdings Indemnified
Party with respect to any misrepresentation or breach of warranty in Article III
or covenant or agreement made by CSX herein in Section 2.1 or Section 5.4,
unless waived in writing by ACL Holdings or any Vectura Party (with ACL Holdings
or any Vectura Party being deemed to have waived in writing if CSX shall have
delivered a written notice to the Vectura Parties pursuant to Section 12.5
hereof disclosing any such matter at least two business days prior to the
Closing, or if any Vectura Party had actual knowledge of the facts constituting
or resulting in such misrepresentation or breach (as shown by CSX), and
nonetheless chose to consummate the Recapitalization Transactions).
(b) Following the Closing and subject to the terms and conditions
provided in this Article X, the Vectura Parties shall indemnify, defend and hold
harmless each ACL Holdings Indemnified Party from and against, and shall
reimburse each ACL Holdings Indemnified Party for, all Adverse Consequences
imposed upon or incurred by such ACL Holdings Indemnified Party with respect to
any misrepresentation or breach of warranty in Article IV or covenant or
agreement made by any Vectura Party herein in Section 2.1 or Section 5.4, unless
waived by ACL Holdings with CSX's written consent (with ACL Holdings being
deemed to have
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waived if the Vectura Parties shall have delivered a written notice to CSX
disclosing any such matter at least two business days prior to the Closing, or
if CSX had actual knowledge of the facts constituting or resulting in such
misrepresentation or breach (as shown by the Vectura Parties), and nonetheless
chose to consummate the Recapitalization Transactions).
Section 10.3. Certain Limitations. (a) The provisions of this Section
10.3 shall not limit or impair any obligation to provide indemnification under
Article VI or Article VII or Section 10.5 for any liability relating to ACL
Excluded Assets, ACL Excluded Liabilities, Vectura Excluded Assets or Vectura
Excluded Liabilities or a breach of the covenants contained in Section 2.1,
Section 5.4, Section 5.8 or Section 5.9 hereof.
(b) The obligations of CSX or the Vectura Parties to indemnify any
Indemnified Party pursuant to Section 10.2 shall terminate on May 31, 1999
except with respect to those representations and warranties set forth in
Sections 3.17 and 4.17, as applicable, which shall survive until the expiration
of the applicable statute of limitations, and in Sections 3.14 and 4.14, as
applicable, which shall survive for a period of three years hereafter.
(c) Notwithstanding anything contained herein to the contrary, neither
CSX nor any Vectura Party shall have any obligation to provide indemnification
under Section 10.2 relating to the matters disclosed in Schedule 3.14 or
Schedule 4.14, nor for any breach of the representations and warranties
contained in Article VII (except as may be provided in Article VII).
(d) Notwithstanding anything contained herein to the contrary, the
maximum aggregate liability of CSX to all ACL Holdings Indemnified Parties taken
together for all Adverse Consequences shall be limited to $85 million, and the
maximum aggregate liability of the Vectura Parties to all ACL Holdings
Indemnified Parties taken together for all Adverse Consequences shall be limited
to $11,250,000.
(e) Notwithstanding anything contained herein to the contrary, (i) CSX
shall not be obligated to make any indemnification payment under Section 10.2
unless and until the aggregate amount of all Adverse Consequences sustained by
the ACL Holdings Indemnified Parties collectively exceed $10,000,000, and any
indemnification with respect to Adverse Consequences shall be made by CSX only
to the extent of such excess over such $10,000,000, and (ii) the Vectura Parties
shall not be obligated to make any indemnification payment under Section 10.2
unless and until the aggregate amount of all Adverse Consequences sustained by
the ACL Holdings Indemnified Parties collectively exceed $1,000,000, and any
indemnification with respect to Adverse Consequence shall be made by the Vectura
Parties to the extent of such excess over $1,000,000.
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Section 10.4. Payment of Indemnification. To the extent that either CSX
or the Vectura Parties is required to provide indemnification to ACL Holdings or
its Subsidiary under Section 10.2, in lieu of making such payment in cash, any
such Party may satisfy such obligation by consenting to an offset by ACL
Holdings (i) to Senior Preferred Membership Interests issued to CSX (for CSX) or
(ii) first to Junior Preferred Membership Interests issued to NMI and then to
Senior Common Amount issued to NMI and then to Junior Preferred Membership
Interests issued to Vectura (for the Vectura Parties), as the case may be, in
each case in the amount of $1.5 of redemption value of such Interests per $1 of
cash indemnification payment, provided that CSX may exercise such right of
offset only up to a maximum of $10 million of cash indemnification payments
(i.e., $15 million of redemption value of Senior Preferred Membership
Interests).
Section 10.5. ACL Holdings Indemnification. Following the Closing and
subject to the terms and conditions provided in this Article X, ACL Holdings and
its Subsidiaries shall indemnify, defend and hold harmless CSX, each Vectura
Party and each of their respective Subsidiaries and their respective officers,
directors and employees (each, a "Party Indemnified Party") from and against,
and shall reimburse each Party Indemnified Party for, all loss or liability
imposed upon or incurred by such Party Indemnified Party with respect to (i) any
liability of ACL Holdings or its Subsidiary, including any liability of ACL or
any Vectura Party or any of their respective Subsidiaries to be transferred to
ACL Holdings or its Subsidiary under this Agreement in connection with the
Recapitalization Transactions, (ii) any failure of ACL Holdings or its
Subsidiary to satisfy any obligation under Article VI or Article VII and (iii)
any liability relating to or arising in connection with any prospectus, offering
memorandum or registration statement relating to the financing contemplated by
the Financing Letters (except to the extent that such liability is caused by or
contained in information furnished in writing to ACL Holdings by such Party
Indemnified Party and relates to such Party Indemnified Party expressly for use
in any such prospectus, offering memorandum or registration statement), in
either case other than any loss or liability which is the subject of
indemnification of the ACL Holdings Indemnified Parties under Section 10.2 or
Section 10.6.
Section 10.6. Vectura Indemnification. Following the Closing and subject
to the terms and conditions provided in this Article X, the Vectura Parties
shall indemnify, defend and hold harmless each ACL Holdings Indemnified Party
and each Party Indemnified Party from and against, and shall reimburse each ACL
Holdings Indemnified Party and each Party Indemnified Party for, all Adverse
Consequences imposed upon or incurred by such ACL Holdings Indemnified Party and
each Party Indemnified Party with respect to, the Vectura Matter, any Vectura
Excluded Asset and any Vectura Excluded Liability.
Section 10.7. Procedures for Third-Party Claims. (a) Promptly after the
receipt by any Indemnified Party of a notice of any claim, action, suit or
proceeding by any third party that may be subject to indemnification hereunder,
such Indemnified
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Party shall give written notice of such claim to the Indemnifying Party stating
the nature and basis of the claim and the amount thereof, to the extent known,
along with copies of the relevant documents evidencing the claim and the basis
for indemnification sought. Delay in or failure of the Indemnified Party to give
such notice shall not relieve the Indemnifying Party from liability on account
of this indemnification, except if and to the extent that the Indemnifying Party
is actually prejudiced thereby. The Indemnifying Party shall have 30 days from
receipt of any such notice of claim (i) to give written notice to assume the
defense thereof and thereby admit to its liability for indemnification hereunder
or to otherwise admit to its liability for indemnification hereunder or (ii) to
dispute the claim of indemnification of the Indemnified Party. If written notice
to the effect set forth in clause (i) of the immediately preceding sentence is
given by the Indemnifying Party, the Indemnifying Party shall have the right to
assume the defense of the Indemnified Party against the third-party claim with
counsel of its choice reasonably satisfactory to the Indemnified Party. So long
as the Indemnifying Party has assumed the defense of the third-party claim in
accordance herewith, (A) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the third-party
claim, (B) the Indemnified Party will not file any papers or consent to the
entry of any judgment or enter into any settlement with respect to the
third-party claim without prior written consent of the Indemnifying Party (not
to be withheld or delayed unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the third-party claim without the prior written consent of the Indemnified
Party (not to be withheld or delayed unreasonably). In the event that the
Indemnifying Party fails to assume the defense, appeal or settlement of the
third-party claim within the thirty-day period described in this Section, the
Indemnified Party shall have the right to undertake the defense or appeal of
such third-party claim on behalf of, and for the account and risk of, the
Indemnifying Party, and the Indemnifying Party shall also be responsible for the
reasonable fees and expenses of one counsel for the Indemnified Party. In no
event shall the Indemnified Party compromise or settle any third-party claim
without the written consent of the Indemnifying Party (which consent shall not
be unreasonably withheld or delayed). Subject to the other provisions of this
Agreement, Indemnified Parties and Indemnifying Parties shall use commercially
reasonable efforts to minimize Adverse Consequences from claims by third parties
and shall act in good faith in responding to, defending against, settling or
otherwise dealing with such claims. Indemnified Parties and Indemnifying Parties
shall also cooperate in any such defense and give each other reasonable access
to all information relevant thereto. Whether or not the Indemnifying Party shall
have assumed the defense, such party shall not be obligated to indemnify the
Indemnified Party hereunder for any settlement entered into without the
Indemnifying Party's prior written consent, which consent shall not be
unreasonably withheld or delayed.
(b) Adverse Consequences, for purposes of third-party claims, shall be
considered actual and shall be paid by the Indemnifying Party (without prejudice
to any rights of challenge or appeal) promptly upon the earlier of (i) the entry
of a judgment against the Indemnified Party and the expiration of any applicable
appeal period; (ii) the
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entry of a nonappealable judgment or a final appellate decision against the
Indemnified Party; (iii) the closing under any settlement agreement; or (iv) two
business days prior to the date on which the liability upon which the indemnity
is based is otherwise required to be satisfied by the Indemnified Party. With
respect to direct claims for which indemnification is payable hereunder, subject
to the terms and conditions provided in this Article X, the Indemnifying Party
shall promptly pay the amount of the Adverse Consequences for which
indemnification is required. Any payment for indemnification hereunder shall be
treated as an adjustment to the Initial Funding Amount.
Section 10.8. Procedures for Non-Third Party Claims. The Indemnified
Party shall notify the Indemnifying Party promptly of its discovery of any
matter giving rise to a claim of indemnity pursuant hereto with detail
reasonably sufficient to evaluate such matter. The Indemnifying Party shall have
30 days from receipt of any such notice to give written notice of dispute of the
claim to the Indemnifying Party with reasonably sufficient detail of the aspects
disputed of such claim for indemnification. The Indemnified Party shall
cooperate and assist the Indemnifying Party in determining the validity of any
claim for indemnity by the Indemnified Party and in otherwise resolving such
matters. Such assistance and cooperation will include providing access to and
copies of information, records and documents relating to such matters,
furnishing employees to assist in the investigation, defense and resolution of
such matters and providing legal and business assistance with respect to such
matters at the cost and expense of the Indemnifying Party, provided that such
access shall not unreasonably disrupt personnel and operations.
Section 10.9. Arbitration. In the event that an Indemnifying Party
delivers to an Indemnified Party a written notice of dispute and such parties
are unable to resolve any dispute as to whether a claim is subject to
indemnification hereunder and/or the amount thereof, the exclusive method for
resolving such dispute shall be binding, nonappealable arbitration in New York,
New York initiated by either such party by a written notice to the other party
demanding arbitration and specifying the clam to be arbitrated. Such arbitration
shall be conducted pursuant to the Expedited Procedures of the Commercial
Arbitration Rules ("Rules") of the American Arbitration Association ("AAA"),
with the following modifications. The arbitration shall be conducted by three
arbitrators, all of whom shall have experience in and familiarity with the
business and industry within which ACL operates. The party initiating
arbitration (the "Claimant") shall appoint its arbitrator in its request for
arbitration (the "Request"). The other party (the "Respondent") shall appoint
its arbitrator within 15 business days of receipt of the Request and shall
notify the Claimant of such appointment in writing. If the Respondent fails to
appoint an arbitrator within such 15 business-day period, the arbitrator named
in the Request shall decide the controversy or claim as a sole arbitrator.
Otherwise, the two arbitrators appointed by the parties shall appoint a third
arbitrator within 15 business days after the Respondent has notified Claimant of
the appointment of the Respondent's arbitrator. When the third arbitrator has
accepted the appointment, the two party-appointed arbitrators shall promptly
notify
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the parties of appointment. If the two arbitrators appointed by the parties fail
or are unable to so appoint a third arbitrator or so to notify the parties, then
the appointment of the third arbitrator shall be made by the AAA, which shall
promptly notify the parties of the appointment. The third arbitrator shall act
as chairperson of the panel. Upon appointment of the third arbitrator, the
arbitrators shall proceed to commence and conduct all proceedings promptly and
in accordance with the Rules. The arbitral award shall be in writing and shall
be final and binding on the parties. At the arbitrators' discretion, the award
may include an award of costs, including arbitration and arbitrators' fees and
reasonable attorneys' fees and disbursements. Judgment upon the award may be
entered by any court having jurisdiction thereof or having jurisdiction over the
parties or their assets.
Section 10.10. Remedies Exclusive. Except where any Party can show, by
the standards required at law and equity, a case of fraud in the inducement (or
similar or related fraud theory) which would permit such Party to set aside or
rescind this Agreement, and except with respect to those covenants which survive
pursuant to Section 10.1, the remedies set forth in this Article X shall be
exclusive and in lieu of any other remedies that may be available to the
Indemnified Parties under any other agreement or pursuant to any statutory or
common law, provided that, notwithstanding the second exception
hereinbeforesaid, the provisions set forth in Section 10.9 shall apply with
respect to those covenants which survive pursuant to Section 10.1.
ARTICLE XI
TERMINATION
Section 11.1. Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual consent of the Parties; or
(b) by either Party, on or after July 15, 1998, if the Closing shall not
have occurred by such date, provided that the Party seeking to terminate this
Agreement under this clause (b) is not then in material breach of this Agreement
and provided further that the right to terminate this Agreement under this
clause (b) shall not be available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date; or
(c) by either Party, if any court of competent jurisdiction or other
Government Authority shall have issued an order, decree or ruling enjoining or
otherwise prohibiting the transactions contemplated by this Agreement (unless
such order, decree or ruling has been withdrawn, reversed or otherwise made
inapplicable), provided that the Party seeking to terminate this Agreement under
this clause (c) is not then in material breach of this Agreement and provided
further that the right to terminate this Agreement under this clause (c) shall
not be available to any Party who shall not have used best efforts to avoid the
issuance of such order, decree or ruling.
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Section 11.2. Procedure and Effect of Termination. (a) In the event of
termination of this Agreement pursuant to Section 11.1, written notice thereof
shall forthwith be given by the terminating Party to the other Party, and this
Agreement shall thereupon terminate and become void and have no effect, no Party
shall have liability to any other Party in respect of this Agreement and the
transactions contemplated hereby shall be abandoned without further action by
the Parties, except that the provisions of the first sentence of Section 5.1(b),
Section 11.2 and Article XII shall survive the termination of this Agreement,
provided that such termination shall not relieve either Party of any liability
for any willful breach of any covenant or agreement contained in this Agreement.
If this Agreement shall be terminated, all filings, applications and other
submissions made in accordance with this Agreement shall, to the extent
practicable, be withdrawn from the persons to which they were made.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
be considered one and the same agreement, and shall become effective when one or
more counterparts have been signed by each of the Parties and delivered to the
other Party. Copies of executed counterparts transmitted by telecopy, telefax or
other electronic transmission service shall be considered original executed
counterparts for purposes of this Section, provided that receipt of copies of
such counterparts is thereafter confirmed.
Section 12.2. Governing Law; Jurisdiction and Forum. (a) This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without reference to the choice of law principles thereof, except for
the internal matters of any corporation or limited liability company, as to
which the corporate or limited liability company law of the jurisdiction of
organization of such corporation or limited liability company shall apply.
(b) Except as otherwise provided in Article X:
(i) The Parties agree that the appropriate and exclusive forum for
any disputes between the Parties arising out of this Agreement
or the transactions contemplated hereby shall be any state or
federal court in the State of New York having venue in the
County of New York. The Parties further agree that no Party
shall bring suit with respect to any disputes arising out of
this Agreement or the transactions contemplated hereby, except
as expressly set forth below for the execution or enforcement
of judgment, in any court or jurisdiction other than the above
specified court. The foregoing shall not limit the rights of
any Party to obtain execution of judgment in any other
jurisdiction. The Parties
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further agree, to the extent permitted by law, that a final
and unappealable judgment against any of them in any action or
proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the
United States by suit on the judgment, a certified or
exemplified copy of which shall be conclusive evidence of the
fact and amount of such judgment.
(ii) By the execution and delivery of this Agreement, each Party
(A) irrevocably designates and appoints The Corporation Trust
Company ("CTC") care of CT Corporation System at its offices
in the City of New York, County of New York, State of New
York, as its authorized agent and attorney-in-fact upon which
process may be served in any Action or proceeding arising out
of or relating to this Agreement, (B) submits to the personal
jurisdiction of any state or federal court in the State of New
York having venue in the County of New York in any such Action
or proceeding and (C) agrees that service of process upon CTC
shall be deemed in every respect effective service of process
upon such person in any such Action or proceeding. Each Party
further agrees to take any and all actions, including the
execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation
and appointment of CTC in full force and effect so long as
this Agreement shall be in effect. The foregoing shall not
limit the rights of any Party to serve process in any other
manner permitted by law.
(iii) To the extent that any Party has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property, such person
hereby irrevocably waives such immunity in respect of its
obligations with respect to this Agreement. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY CLAIM TO A TRIAL BY JURY IN ANY ACTION
RESPECTING MATTERS ARISING OUT OF THIS AGREEMENT AND ANY
OBJECTION TO THE LAYING OF VENUE OR PROCEEDING IN THE COURTS
SPECIFIED IN SECTION 12.2(b)(I) ABOVE.
(iv) All "Indemnified Parties" and "Indemnifying Parties" shall be
considered "Parties" and bound hereunder for the purposes of
this Section and Article X.
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(v) In the event of any actual or threatened default in, or breach
of, any of the terms, conditions and provisions of this
Agreement, the Party or Parties who are or are to be thereby
aggrieved shall have the right of specific performance and
injunctive relief giving effect to its or their rights under
this Agreement, in addition to any and all other rights and
remedies at law or in equity, and all such rights and remedies
shall be cumulative. The Parties agree that the remedies at
law for any breach or threatened breach, including monetary
damages, are inadequate compensation for any loss and that any
defense in any action for specific performance that a remedy
at law would be adequate is waived.
Section 12.3. Entire Agreement; Third-Party Beneficiary. This Agreement
(including agreements incorporated herein) and the Confidentiality Agreement
contain the entire agreement between the Parties with respect to the subject
matter hereof, and there are no agreements, understandings, representations or
warranties between the Parties other than those set forth or referred to herein.
Except for those provisions hereof respecting the Indemnified Parties, which are
intended to benefit and to be enforceable (subject to the terms and conditions
herein provided) by such Indemnified Parties, this Agreement is not intended to
confer upon any person not a Party hereto (or its successors and assigns
permitted hereby) any rights or remedies hereunder.
Section 12.4. Expenses. Except as set forth in this Agreement, whether
or not the Recapitalization Transactions are consummated, all advisory, legal
and other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such costs
and expenses (it being understood that such costs and expenses incurred by ACL
Holdings or ACL prior to the Closing shall be for the account of CSX). Following
the Closing, ACL Holdings shall pay (or reimburse the appropriate Party for) any
sales, use, transfer, recording or other Taxes (other than Income Taxes) imposed
in connection with the Recapitalization Transactions. It is understood and
agreed by the Parties that ACL Holdings and ACL shall have no liability or
expense under any Financing Letter except upon consummation of the
Recapitalization Transactions, all such liability or expense to be borne by the
Vectura Parties.
Section 12.5. Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices shall
be effective only upon actual delivery to the persons and by the means provided
herein. Notices to the Vectura Parties shall be addressed to:
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c/o Citicorp Venture Capital, Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx, Xx.
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telecopy Number: (000) 000-0000
or at such other address and to the attention of such other person as the
Vectura Parties may designate by written notice to ACL Holdings. Notices to CSX
or ACL Holdings shall be addressed to:
CSX Corporation
One Xxxxx Center
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telecopy Number: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
Telecopy Number: (000) 000-0000
with a copy, in the case of ACL Holdings, to:
American Commercial Lines LLC
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telecopy Number: (000) 000-0000
or at such other address and to the attention of such other person as CSX or ACL
Holdings may designate by written notice to the Vectura Parties.
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Section 12.6. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
assigns, provided that no Party may assign its rights or delegate its
obligations under this Agreement without the express prior written consent of
the other Party, provided that this Agreement may be assigned without the
consent of any Party as collateral security to lenders in connection with the
transactions contemplated by the Financing Letters if such collateral assignment
shall not result in such lenders having any right of consent to any waiver or
modification hereunder prior to such time as such lenders provide notice that
they are exercising remedies following an event of default under such collateral
assignment.
Section 12.7. Headings; Definitions. The Section, Article and other
headings contained in this Agreement are inserted for convenience of reference
only and shall not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles of
this Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
Section 12.8. Amendments and Waivers. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the Party
against whom enforcement of any such modification or amendment is sought. Any
Party may, only by an instrument in writing, waive compliance by the other
Parties with any term or provision hereof on the part of any such other Party to
be performed or complied with. The waiver by any Party of a breach of any term
or provision hereof shall not be construed as a waiver of any subsequent breach.
Section 12.9. Interpretation; Absence of Presumption. (a) For purposes
of this Agreement, (i) "to the knowledge of ACL" shall mean the actual knowledge
of Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxx or Xxxxx X. Xxxxxx after
due inquiry and "to the knowledge of any Vectura Party" shall mean to the actual
knowledge of Xxxxx Xxxxxxxx, III, Xxxx X. Xxxxxxxxx, Xxxxxxx X. Verona or Xxxxxx
X. X'Xxxx after due inquiry or to the actual knowledge of Xxxxx X. Xxxxxx or
Xxxxxxx X. Xxxxxxxx, Xx., (ii) words in the singular shall be held to include
the plural and vice versa and words of one gender shall be held to include the
other genders as the context requires, (iii) the terms "hereof," "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
and Exhibits hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph and Schedule references are to the Articles,
Sections, paragraphs, Schedules and Exhibits to this Agreement unless otherwise
specified, (iv) the word "including" and words of similar import when used in
this Agreement shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified, (v) the word "or" shall not be
exclusive and (vi) provisions shall apply, when appropriate, to successive
events and transactions.
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(b) For purposes of this Agreement, "material adverse change" or
"material adverse effect," with respect to any person, means any change or
effect that either individually or in the aggregate with all other such changes
or effects is materially adverse to the business, operations, properties or
assets of such person (excluding the assets and liabilities of such person which
will not be transferred to or become part of ACL Holdings or its Subsidiary in
the Recapitalization Transactions), but excluding any such change or effect
resulting directly and primarily from (i) any change, effect, event or
occurrence relating to the United States economy generally or to such person's
industries generally which change, effect, event or occurrence does not or would
not reasonably be expected to have a materially disproportionate effect on such
person relative to other persons in the same industries or (ii) the announcement
or consummation of the transactions contemplated hereby; and the terms
"material" and "materially" shall have correlative meanings.
(c) This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the Party drafting or
causing any instrument to be drafted.
(d) It is understood and agreed that neither the specification of any
dollar amount in the representations and warranties contained in this Agreement
nor the inclusion of any specific item in the Schedules or Exhibits to this
Agreement is intended to imply that such amounts or higher or lower amounts, or
the items so included or other items, are or are not material, and neither Party
shall use the fact of the setting of such amounts or the fact of the inclusion
of any such item in the Schedules or Exhibits to this Agreement in any dispute
or controversy between the Parties as to whether any obligation, item or matter
is or is not material for purposes hereof.
Section 12.10. Severability. Any provision hereof which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof or the validity or enforceability of such provision in any
other jurisdiction. The Parties shall negotiate in good faith to replace any
provision so held to be invalid or unenforceable so as to implement most
effectively the transactions contemplated by such provision in accordance with
the Parties' original intent.
Section 12.11. Timing. Time shall be of the essence in the performance
of the obligations, covenants and agreements contained in this Agreement.
Section 12.12. NMI Holdings. Upon formation, NMI Holdings shall deliver
to each Party a written undertaking to honor all commitments and agreements made
with respect to NMI Holdings herein.
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IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the Parties as of the day first above written.
CSX CORPORATION
by:______________________
Name:
Title:
VECTURA GROUP, INC.
by:______________________
Name:
Title:
AMERICAN COMMERCIAL LINES HOLDINGS LLC
by: CSX XXXXX CORP., as
Manager
by:______________________
Name:
Title:
AMERICAN COMMERCIAL LINES LLC
by: AMERICAN COMMERCIAL
LINES HOLDINGS LLC, as
Manager
by: CSX XXXXX CORP., as Manager
by:______________________
Name:
Title:
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NATIONAL MARINE, INC.
by:______________________
Name:
Title:
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EXHIBIT A
CERTAIN TERMS OF ACL HOLDINGS LLC AGREEMENT
Jurisdiction of Organization: Delaware.
Board: The business and affairs of ACL Holdings
shall be managed by a Board of Managers
having duties comparable to a corporate
Board of Directors. The Board of Managers
shall be composed of seven individuals as
follows: two shall be designated by CSX (so
long as CSX holds 25% of the Junior Common
Membership Interests issued to CSX at
Closing or until a Qualified Public Offering
(as defined below) shall have been
consummated, following which CSX shall have
the right to designate one director), two
shall be designated by the Vectura Parties,
one shall be the current CEO of ACL
Holdings, one shall be the current CEO of
Vectura and one shall be a director
independent of all Parties (and their
Affiliates) designated by the Vectura
Parties. CSX and the Vectura Parties will
have like representation on each committee
(if any) of ACL Holdings' governing body.
Capitalization: ACL Holdings shall be authorized to issue
Senior Preferred Membership Interests,
Junior Preferred Membership Interests,
Senior Common Membership Interests and
Junior Common Membership Interests in
amounts sufficient to consummate the
Recapitalization Transactions. Each
Preferred Membership Interest shall have an
initial Redemption Value of $100, which
shall compound annually at the rate per year
of the lesser of (i) 12% and (ii) the
maximum rate permitted for current interest
deductions under Section 163(e)(5) of the
Internal Revenue Code (the "Preferred
Rate"). The Senior Common Membership
Interests shall represent an aggregate
capital interest of $3,389,091 and an
aggregate future profits interest in ACL
Holdings of $32,500,000 (subject to
adjustment as described in the
Recapitalization Agreement) and shall accrue
a compounded annual yield at the Preferred
Rate on a notional principal amount of
$35,889,091.
As to dividend, distribution and liquidation
preference, except as otherwise provided
herein and except with
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respect to redemptions of Membership
Interests held by management of ACL Holdings
upon their termination, Senior Preferred
Membership Interests shall rank prior to
Junior Preferred Membership Interests,
Junior Preferred Membership Interests shall
rank prior to Senior Common Membership
Interests and Senior Common Membership
Interests shall rank prior to Junior Common
Membership Interests.
Voting Rights: Each Junior Common Membership Interest shall
be entitled to one vote. All other classes
of Membership Interests shall be non-voting,
except as otherwise provided herein or by
law.
Redemption: ACL Holdings shall mandatorily redeem all
Senior Preferred Membership Interests and
Junior Preferred Membership Interests in
year 15 at the amount of the Redemption
Value (plus accrued and unpaid yield
thereon) of such Membership Interests at
such time. Optional redemptions of such
Membership Interests and Senior Common
Membership Interests shall be permitted at
ACL Holdings' option at any time, subject to
the priority of such Membership Interests
(other than as set forth below), without
premium or penalty, provided that CSX's
consent will be required (prior to an
Initial Public Offering or a Sale of ACL) to
redeem Senior Preferred Membership Interests
held by CSX if, following such redemption,
CSX would hold Senior Preferred Membership
Interests with an aggregate Redemption Value
below $100 million, provided, however, that
CSX's consent will not be required (i) in
connection with, or after the consummation
of, transactions causing ACL Holdings not to
be treated as a partnership for tax purposes
or (ii) after CSX has sold its Senior
Preferred Membership Interests, provided
further that if CSX does not so consent, (x)
ACL Holdings may use the proceeds that would
otherwise have been used to redeem the
Senior Preferred Membership Interests to
redeem other Membership Interests which are
redeemable as provided herein in their
relative priorities (and on a pro rata basis
within a given priority) and (y) the Parties
will cooperate in good faith to create a
mutually satisfactory mechanism comparable
to a defeasance.
Holders of Preferred Membership Interests
shall have the option to have such Interests
redeemed at the Redemption
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Value (plus accrued but unpaid yield
thereon) upon consummation of a Change of
Control.
Public Offering: Immediately prior to a public offering of
Membership Interests in ACL Holdings, all
Membership Interests shall be converted into
corporate interests so as to preserve the
economic, governance, priority and other
rights and privileges attendant to such
Membership Interests. For purposes hereof, a
"Qualified Public Offering" shall mean a
public offering of common equity interests
in an amount which raises net cash proceeds
to ACL Holdings of at least $200 million.
Veto Rights: CSX shall be entitled to veto rights with
respect to the following transactions
howsoever directly or indirectly structured:
(i) any merger or other acquisition
transaction (other than the
acquisition of new capital assets as
part of the regular capital
budgeting process) involving
consideration of $250 million or
more;
(ii) any transaction through which ACL
Holdings or its Subsidiary would
become a Subchapter C corporation
(other than an Initial Public
Offering consistent with the other
terms hereof, a transaction in which
CSX has tag-along or drag-along
rights as provided herein or a
transaction in which ACL Holdings or
its Subsidiary would become a
Subchapter C corporation solely as a
result of CSX's actions, omissions
or elections or as a result of
changes in tax (including tax rules
and regulations) or limited
liability company laws as a result
of which the tax or limited
liability benefits of ACL Holdings'
status and/or operations are
adversely impacted);
(iii) [intentionally omitted]
(iv) any amendment to the LLC agreement
of ACL Holdings or its Subsidiary
which would adversely affect CSX;
(v) any definition of "Excess Cash
Flow", "Restricted Payments" and
"Change of Control" (and related
definitions regarding the Senior
Preferred
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Membership Interests) in financing
agreements; and
(vi) transactions with Affiliates
(including provisions such that CSX
and the Vectura Parties,
respectively, shall control the
enforcement or amendment of rights
under the Recapitalization Agreement
vis-a-vis the other and its
Affiliates), other than transactions
expressly contemplated by the
Recapitalization Agreement or the
ACL Holdings LLC Agreement.
The veto rights set forth in (i), (ii) and
(iv) above shall terminate once CSX (or its
Subsidiary) no longer holds both (x) Junior
Common Membership Interests in an amount of
at least 25% or more of the Junior Common
Membership Interests issued to CSX (or its
Subsidiary) at Closing and (y) an interest
in an amount of Senior Preferred Membership
Interests of 5% or more of the amount of
Senior Preferred Membership Interests issued
to CSX (or its Subsidiary) at Closing (or
CSX refuses to consent to an optional
redemption by ACL Holdings of Senior
Preferred Membership Interests that would
have resulted in CSX (or its Subsidiary)
holding less than 5% of the amount of Senior
Preferred Membership Interests issued to CSX
(or its Subsidiary) at Closing). The veto
rights set forth in (v) above shall
terminate once CSX (or its Subsidiary) fails
to hold an interest in any Senior Preferred
Membership Interests.
Pre-Emptive Rights: Prior to a Qualified Public Offering, each
holder of Junior Common Membership Interests
will have the opportunity to subscribe for
its pro rata share (based on ownership of
Junior Common Membership Interests) of any
offering by ACL Holdings or any of its
Subsidiaries of additional preferred or
common equity securities, warrants or
options (except for such securities issued
to non-Affiliated sellers in acquisitions by
ACL Holdings, to sources of financing as
"equity kickers", to management as incentive
compensation or to the public in a
registered public offering).
Registration Rights: The Vectura Parties and CSX shall have the
following rights with respect to Junior
Common Membership Interests held by each of
them (other than with respect to
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the registration of an initial public
offering of common equity interests in an
amount which raises net cash proceeds to ACL
Holdings of at least $50 million (an
"Initial Public Offering"), registrations on
Form S-8 and registrations solely of "equity
kickers"), and ACL Holdings shall not
register securities (other than debt
securities) otherwise: (a) CSX shall have
two Form S-1 demand rights commencing six
months following the consummation of an
Initial Public Offering, and (b) the Vectura
Parties shall have three Form S-1 demand
rights (the "S-1 Demands"); provided, that
in no event shall two S-1 Demands be made by
any Party within a single 90-day period and
the first S-1 Demand of the Vectura Parties,
if prior to an Initial Public Offering,
shall result in the registration of equity
securities resulting in an amount of net
cash proceeds sufficient to qualify as an
Initial Public Offering, and (c) each Party
shall have unlimited piggyback (including
with respect to the Vectura Parties first
such S-1 Demand) and Form S-3 demand (to the
extent such form is available to ACL
Holdings) registration rights. In addition,
CSX will have one S-1 Demand with respect to
Senior Preferred Membership Interests (or
derivatives thereof) exercisable after the
earlier of (i) the third anniversary of the
Closing (provided that neither such
registration nor a sale pursuant to such
registration would cause ACL Holdings not to
be treated for tax purposes as a partnership
or would result in a Code Section 708
termination of ACL Holdings (unless CSX
makes the non-transferring members whole for
such termination)) and (ii) six months
following an Initial Public Offering, and
unlimited piggyback (including with respect
to the Vectura Parties first such S-1
Demand) and Form S-3 (to the extent such
form is available to ACL Holdings) demand
registration rights with respect to Senior
Preferred Membership Interests (or
derivatives thereof), exercisable after six
months following an Initial Public Offering.
ACL Holdings shall bear all expenses
incident to its compliance with such
registration rights. Membership Interests
shall not be transferable otherwise, except
as otherwise specifically provided herein,
and except that CSX may transfer its Senior
Preferred Membership Interests (or
derivatives thereof) subject to paragraph 4
of "Additional ACL Holdings LLC Agreement
Terms" or in a transaction which does not
require registration under the Securities
Act.
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Tag-Along Rights: The Vectura Parties and CSX may participate
pro rata (based on ownership of Junior
Common Membership Interests) in any sale or
transfer of ACL Holdings equity securities
by the other (other than, following ACL
Holdings' Initial Public Offering, sales
under Rule 144 of the Securities Act of
1933, as amended, sales to specified
Affiliate transferees, pursuant to a sale
described in "Registration Rights" above in
which piggyback rights are available,
pursuant to a drag-along transaction and of
up to a cumulative 5% of such Party's
initial holdings of Junior Common Membership
Interests (each, an "Exempt Transfer"), and
in any control transaction howsoever
structured, to any party, provided that (i)
such tag-along rights shall not apply to
transfers made pursuant to any first offer
right under clause (i) of "Rights of First
Offer on Transfers" below and (ii) such
tag-along rights shall apply to any sale or
transfer (other than Exempt Transfers) of
Vectura's or NMI's (or any newly formed
holding company's) equity securities by the
holders thereof, giving effect to the
relative economics of such equity
securities. In addition, CSX may participate
pro rata (based on ownership of Junior
Preferred Membership Interests) in any sale
or transfer of Junior Preferred Membership
Interests by the Vectura Parties. The
foregoing shall survive a Qualified Public
Offering, but shall terminate upon a Sale of
ACL (as defined below).
Drag-Along Rights: In the event of a sale of all of ACL
Holdings approved by its Board of Managers
(whether by sale of Membership Interests,
all or substantially all assets or
businesses, merger or otherwise (a "Sale of
ACL")), each holder of Membership Interests
shall consent to, approve and participate in
such transaction on the same terms and
conditions and such drag-along rights shall
apply to any sale or transfer (other than
Exempt Transfers) of Vectura's or NMI's (or
any newly formed holding company's) equity
securities by the holders thereof, giving
effect to the relative economics of such
equity securities. Any such transaction
shall also be a Change of Control, and any
such transaction which would not also
otherwise trigger tag-along rights as
provided above shall trigger a liquidation
of ACL Holdings. The foregoing shall survive
a Qualified Public Offering.
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Rights of First Offer
on Transfers: Prior to a Initial Public Offering of ACL
Holdings, transfers of Membership Interests
by any holder thereof (a "Holder"), other
than Exempt Transfers, shall be subject to
the following first offer rights:
(i) with respect to any class of
Membership Interests held by members
of management; first, offer to ACL
Holdings (which may hold for or
reissue such Membership Interests to
other active members of management);
and second, offer to all Holders of
such class of Membership Interest,
pro rata; and
(ii) with respect to all other Membership
Interests of any class; first, offer
to ACL Holdings; and second, offer
to all Holders of such class of
Membership Interest, pro rata.
Exchange: At ACL Holdings' option, Senior Preferred
Membership Interests may be exchanged into
current-pay subordinated notes containing
the same features as such Membership
Interests at any time contemporaneously with
or following ACL Holdings' conversion to a
Subchapter C corporation.
Covenants: Senior Preferred Membership Interests shall
have the benefit of covenants respecting
restricted payments (providing that ACL
Holdings shall pay no cash in respect of any
Membership Interests ranking junior in
priority to the Senior Preferred Membership
Interests until all Senior Preferred
Membership Interests have been redeemed,
except with respect to redemptions of
Membership Interests held by management upon
their termination or tax distributions
pursuant to "Additional Terms of ACL
Holdings LLC Agreement"), Affiliate
transactions, no issuance of Membership
Interests senior in priority to the Senior
Preferred Membership Interests and delivery
of financial statements.
Other: During the Noncompete Period, CVC shall not
sponsor or co-sponsor an acquisition of any
business which is principally engaged in the
Business (defined with reference to the CSX
non-compete), unless it first offers to the
Board of Managers the opportunity for ACL
Holdings (or its Subsidiary) to make such
acquisition; provided, that
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nothing herein shall (i) be deemed to be
binding on Citibank, N.A., Citicorp or any
of their respective current or prospective
Affiliates (other than CVC and its
Affiliates) or (ii) restrict the activities
of CVC's existing portfolio companies not
controlled by CVC, except that during the
Noncompete Period, CVC shall use its best
efforts to cause any such existing portfolio
companies not to participate in any
acquisition of any business which is
principally engaged in the Business.
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